FTSE 100 Closes at 10,440, Up 1.06% on Trump “Don’t” Intervention; Brent Back to $94
The FTSE 100 closed at 10,440 on Tuesday, up 1.06% on the day, recovering most of Monday’s Iran-escalation losses on Trump’s “Don’t” intervention with Netanyahu and his announcement of an Israel-Hezbollah cessation of hostilities. Brent crude fell 4% to $94.30 a barrel as the war-risk premium eased materially. UK 10-year gilt yields fell back to the 5.00% line, retracing Monday’s spike. Sterling firmed to $1.3425; gold eased to $4,470. The VIX is down nearly 13%. Defence stocks BAE Systems, Babcock and Melrose pulled back from Monday’s highs; oil majors BP and Shell led the FTSE losers.
The Tuesday close completes the cleanest single-day reversal of Monday’s risk-off trade. If the Trump-brokered Israel-Hezbollah cessation holds and Iran formally re-engages with the framework deal in the coming days, Brent is likely to test $88-92 within 48-72 hours and the FTSE could push toward the 10,690 April high. The 5.00% gilt yield is right at the 5% line that has been the binding macro-political resistance level for the Reeves Treasury through May. The Bank of England MPC’s rate-cut path is back on track: if Brent stays in the $88-95 range through mid-June, the next rate cut remains priced in. The Ofgem October price-cap reset would absorb most of the July 13% hike on a sustained Brent decline.