FTSE 100 Live: London stocks hit new record high, oil rises and dollar falls on Iran tension

• FTSE 100 closes at 8,885
• UK GDP down as services and manufacturing waver
• Halma tops blue-chip leaderboard after strong final results
• Tesco up as growth improves despite fierce competition  

4.58pm: FTSE closes higher

London’s FTSE 100 rose 0.2% to close at 8,885 on Thursday, buoyed by strength in energy stocks and cautious optimism over U.S.-China trade talks.

Oil majors Shell and BP led gains, helping the index outperform other European peers after US President Donald Trump signaled flexibility on a July 8 trade deadline and hinted at progress in negotiations. The upbeat sentiment overshadowed fresh geopolitical risks, including Trump’s decision to withdraw personnel from the Middle East amid rising tensions with Iran.

Still, signs of domestic economic weakness tempered broader enthusiasm. UK GDP contracted by 0.3% in April, the first monthly decline since October, as higher taxes and energy bills weighed on growth. The weaker-than-expected reading cast doubt on the sustainability of the strong Q1 rebound and added to concerns that momentum may stall heading into the summer.

3.51pm: New record high

The FTSE 100 has just notched a new intraday record high, topping 8,892.36.

This beats the 8,891.3 intraday record set on 3 March.  

US stocks are also higher. 

US Treasury Secretary Scott Bessent has been speaking to the Senate Finance Committee in Washington. "I believe we will see more trade deals coming very quickly," is one of his lines that has helped boost setiment. 

Endeavour Mining is the top riser, on the back of the recent gains in the gold price. 

BT Group is up too, along with GSK and Hikma Pharma. 

Halma and Tesco are both up on the back of numbers they released earlier.  

Market analyst Chris Beauchamp at IG says US stocks are being lifted as buyers are "trying again" in the wake of the US factory gate inflation data, after CPI yesterday showed a similar pattern.

"A calmer tone also prevails after last night’s mini-panic over fears of an immediate attack on Iran by Israel, though nervousness will persist around this issue for the time being.

"With inflation data out of the way, earnings season wrapped up and a ‘no change’ from the Fed expected next week, investors would do well to remember the adage ‘never short a quiet market’,” Beauchamp says.

On gold, he notes the price is testing the $3,400 area again, a level that has marked the extent of upside over the past two months.

"Renewed USD weakness always helps of course, and since inflation still looks contained there is reason to expect further falls for the greenback ahead of next week’s likely-uneventful Fed meeting."

Goldman Sachs also put out a note saying it was reducing its recession probability forecast. 

"An easing in financial conditions and a moderation in trade policy uncertainty suggests tariffs will have a slightly smaller effect on growth and consumer price increases than previously forecast."

2.55pm: US stocks open in red

US stocks indeed started lower, as predicted.

The Dow Jones dropped 0.4%, while the S&P 500 fell 0.1% and the Nasdaq 0.2%, with the worst effected being the domestically focused Russell 2000 small cap index, down 0.7%.

Boeing is a big drag on the Dow, down 4.4% now folliowing the Air India crash. 

"While it’s too early to determine the cause, the fact that this is the first crash involving a 787 raises serious concerns," says Neil Wilson at Saxo.

"If a manufacturing flaw is to blame, it would be a major setback for Boeing, which has been working hard to rebuild its safety record after the two fatal 737 Max crashes in 2018 and 2019. The incident threatens to undermine recent progress in restoring investor and public confidence."

Oracle is the top riser in the S&P, up 11% after lifting its guidance due to AI demand. 

1.46pm: FTSE on the rise, US futures off their worst

The FTSE 100 has climbed into positive territory in the past hour or so.

Oil giants, grocers, gold miners and utilities are doing the lifting. 

The leaderboard looks like this:

• Halma 4.1%
• Tesco 2.8%
• BT Group 2.3%
• Endeavour Mining 2.2%
• Hikma Pharmaceuticals 1.8%
• Marks & Spencer 1.7%
• Kingfisher 1.6%
• Vodafone 1.6%
• GSK 1.6%
• BP 1.4%

Across trhe pond, US factory gate prices were weaker than expected, and Wall Street futures have come off their worst levels as markets move to fully pricing two Federal Reserve interest rate cuts this year. 

The producer price index was up 0.1% month on month in May, below the 0.2% consensus forecast and after the previous month showed 0.1% deflation. 

Initial jobless claims also are in for the past week, at 248K just above the 242K foreccast. 

1pm: More reasons why the dollar is weakening 

It's not just the trade war that matters to the US dollar, says Deutsche Bank currency guru George Saravelos, submarines matter too.

A "broader withdrawal of US leadership" is triggering a geopolitical realignment, he says.

"Within this context, reporting overnight that the US is re-evaluating its participation in the AUKUS defence pact is highly relevant for the dollar, in our view."

Weaker geopolitical alignment between the US and its allies, in this case the UK and Australia, "undermines US inflows".

Saravelos also notes that the ECB released its annual report on the euro yesterday, where Western geopolitical alignment is highlighted as playing a key role in attracting US inflows over the last decade.

"The broader message from all of this is that the backdrop to foreign inflows of US capital remains very challenged."

Economic indicators continue to indicate an "effective buyers' strike" on US assets in recent weeks, which explains how a rebound in US equities driven by domestic retail investors is coinciding with continued weakness of the US dollar.

12.37pm: Dollar weakness has 'further to run'

The US dollar could sink even further, says Vasileios Gkionakis, economist and strategist at Aviva Investors.

Already, on a trade-weighted basis, the buck is down around 9% since mid-January, despite higher yields since early April.

"One interpretation is that equity flows have been the main driver for the dollar: as the market prices out US exceptionalism, it diverts equity allocations away from the US and into other developed markets putting pressure on the exchange rate," he says, but finds a number of flaws with the argument when using empirical evidence.

Instead, Gkionakis believes it is related to underlying risk.

"The US has been enjoying a significant privilege for decades, with higher issuance being matched by foreign investors’ appetite for US paper. This is now shifting," he says, "with the US likely to run large fiscal deficits for years without a commensurate fiscal impulse – and against a backdrop of an extended net international investment position.

"All this is agitating markets, who in order to lend to the US would require a combination of higher yields and a weaker exchange rate.

"In other words, the shift away from US exceptionalism is driving the US risk premium higher and is weighing on the value of the dollar. Indeed, our estimate of the US10Y risk premium has correlated rather well with the dollar movements since April."

Gkionakis points to similar stories during the euro area debt crisis and in the UK in 2022, when risk premia in the EA and the UK rose sharply by at least 100 basis points.

Since Trump's tariff 'liberation day', risk premia have risen some 35 basis points in the US, so he suggets that it "seems to me that USD weakness has much more room to run"

12.19pm: US futures and dollar sink

The pound is up 0.4% at $1.3587 and the euro 0.9% to $1.159 (its highest in three and a half years) as the US dollar has subsided heavily in the past few hours, with the DXY dollar index sinking to a three-year low of 97.8.

People are questioning the greenback's safe haven status.

It comes after President Trump confirmed he will impose new unilateral tariff rates within the next fortnight.

US equity futures have dropped too, with the S&P 500 down 0.5%, the Nasdaq 100 down 0.6% and Dow Jones futures faling 0.4%.

Instead of the Buck, demand has picked up for other safe haven assets, including gold and US Treasuries.

"Risk is back in charge," says Nigel Green at Devere Group. "This is a stark reminder that geopolitics – not earnings, not data – can still set the tone for capital markets.

"We’re seeing trade policy used again as a blunt-force economic instrument. That has consequences for every asset class."

10.52am: Boeing plane from India to UK crashes

Shares in Boeing Co (NYSE:BA, ETR:BCO) are down after reports of a crash in India. 

Reports suggest 217 adults and 11 children were on board a flight that crashed in Ahmedabad, en route to the UK. 

This includes a reported 53 British passengers and one Canadian. 

The plane was a Boeing 787-8 Dreamliner.

10.18am: Gold price analysis

The pause in the rise of gold in recent weeks "bodes well for the next leg higher", reckons UBS strategist Joni Teves, after the yellow metal consolidated since hitting an all-time high of $3,500 in late April.

"Market participants have been reacting to volatile developments on US tariffs, economic data prints and the corresponding implications for Fed policy.

She adds: "High levels of uncertainty around US tariffs, fiscal policy and the Fed’s consequent response reinforce the appeal to diversify portfolios, wherein gold stands out as an attractive option."

Thinner market conditions mean that it "does not take a lot of volume to move the price in the current environment", amid continued buying from central banks, inflows into ETFs and physical investment interest suggest metal is "being made unavailable to the market".

9.39am: European stocks slump

The gains for oil and Halma and Tesco, which is now up 2.2% along with other grocery groups Sainsbury's and M&S, mean that the FTSE 100 is outperforming other European stock markets this morning, despite being in the red.

Germany's DAX has slumped 1.2% as carmakers BMW, Daimler, Mercedez and VW fall. Italy's FTSE MIB is 1.1% lower, France's CAC 40 and Spain's IBEX have both dropped 0.8%.

Confusion about tariffs is not helping markets, after Trump said he will set unilateral tariffs rates within two weeks, while this week's deal left China tariffs at 55%.

Trump told reporters in Washington: "We’re going to be sending letters out in about a week and a half, two weeks, to countries, telling them what the deal is.

"At a certain point, we’re just going to send letters out, and I think you understand that, saying 'this is the deal, you can take it or leave it'."

Market analyst Ipek Ozkardeskaya at Swissquote Bank says "optimism is waning" and, even worse for European stocks, "there are rumours that the EU will hardly ink a deal before the July deadline, and Trump has threatened other Asian nations with fresh tariffs".

More positively, US Treasury Secretary Bessent suggested that they could extend the deadline by 90 more days if they believe “good faith” efforts are being made.

9.06am: Housing market turning up?

A RICS survey of house surveyors earlier showed the net balance reporting that house prices have risen over the last three months fell to -8 in May from -3 in April. 

This was its lowest in almost a year. 

But the RICS three-month forward price expectations balance improved to -12 in May from -20 in April, its best level since January. The survey’s 12-month-ahead price balance slipped to 34 from 39.

"Buyers bringing forward house moves ahead of April’s hike to stamp duty was still weighing on the headline RICS house price balance in May and could continue to do so in June, but there are plenty of green shoots emerging now," says Pantheon Macroeconomics. 

The headline price balance points to house price inflation slowing to around 2% year-over-year in May, from the 6.4% increase registered by the official house price index in March.

"But that slowdown looks too pessimistic given the hard data, and forward looking indicators improved or remain solid."

8.50am: Travel stocks hit 

Airlines and travel stocks are down around Europe, in sync with oil and gold being up. Geopolitical tensions are expected to hit holiday demand, while rising oil prices is bad for airline and cruise ship profit margins. 

British Airways owner International Consolidated Airlines Group SA (LSE:IAG) is down 2.6% and easyJet PLC (LSE:EZJ) 1.8% lower on the FTSE. 

Intercontinental Hotels Group PLC (LSE:IHG) is down 2.2% and Whitbread PLC (LSE:WTB) 1.5% lower.

Among the mid- and small-caps, Wizz Air Holdings PLC (AIM:WIZZ) has dropped 3.5%, while On the Beach Group (LSE:OTB) has fallen 3.9%.

Cruise operator Carnival is down 3% too. 

This follows falls for US airlines and cruise liners overnight, with United Continental down 5.5%, Delta Air Lines, Southwest Airlines, and Norwegian Cruise Lines all slipping at least 2.5%. 

The Euro Stoxx 600 is down 0.6%, with TUI, Carnival and Lufthansa leading the fallers.

8.37am: Oil prices at two month highs

HIgher oil prices are lifting Shell PLC (LSE:SHEL, NYSE:SHEL) and BP PLC (LSE:BP.) this morning, with Brent crude having topped $70 overnight and while back down at $69, this is still around the highest since early April. 

Crude hovering near two-month highs is being driven by rising US-Iran tensions and fears of supply disruptions, says analyst Matt Britzman at HL.

US President Donald Trump questioned the chances of an Iran nuclear deal and Tehran said it would hit US military bases if attacked.

"At the same time, optimism about energy demand grew after the US and China reached a trade framework, and US crude stockpiles fell more than expected, signalling strong consumption."

Gold prices are also remaining elevated at $3360 an oz, with the yellow metal's safe-haven appeal also gaining traction from geopolitical tensions.

Softer US inflation data has also given a modest boost to expectations for US rate cuts.

8.14am: FTSE seeking direction, Halma and oilers up

The FTSE 100 looks to be seeking direction in early trades, dropping in the red, then bouncing back four points to the good and now flat at 8,864.

Halma PLC (LSE:HLMA) is the top riser, up 7.3%, on its full-year results. 

BP and Shell are both up over 1.2%, with precious metals focused Endeavour Mining and Fresnillo both also up around 1.4%.

Fallers include Intermediate Capital Group, down 4% as its shares go ex-dividend, and airlines easyJet and IAG, down 2%. 

7.57am: Revolution Beauty bids update, Pod Point bought by EDF

The M&A news keeps coming. 

Revolution Beauty Group PLC (AIM:REVB) has provided a short update after its bid deadline closed yesterday.

It is still only saying that it received "a number" of potential expressions of interest in a takeover, but adds that it is now evaluating these bids before potentially offering further access to its book for its preferred bidder. 

It is also having "positive engagement" with major shareholders about a potential equity raise, and is making "encouraging progress" on cost structure and go to market strategy. 

Elsewhere, Pod Point Group Holdings PLC (LSE:PODP) has agreed to be taken over by EDF, which owns a 53% stake in the EV charging outfit anyway.

The French energy giant will pay shareholders 6.5p per share in cash for the shares it does not already own – a 24% premium to the last closing price before the offer period began in April – for a valuation of £10.6 million for the company.

7.33am: Tesco sees off rivals in first quarter

In comany news, Tesco PLC (LSE:TSCO) is keeping its wide full-year profit guidance unchaged amidst what it called an "intensely competitive" grocery market.

For the first quarter of its financial year, like-for-like sales grew 4.6%, led by 5.5% growth in the Republic of Ireland and 5.1% for the rest of the UK. This was up from the 3.1% seen for the past year.

Wholesale business Booker saw 2.0% growth, despite tobacco headwinds, bouncing back from a negative prior year. 

Boss Ken Murphy hailed an increase in UK market share and said the group would continue to face off rivals using its massive pricing power. 

"The market remains intensely competitive, and we are committed to ensuring customers get the best value in the market by shopping at Tesco."

7.20am: Disappointing data on GDP and trade

It's a mostly disappointing set of UK economic data this morning, with UK monthly GDP down 0.3% in April after a 0.2% rise the month before, and worse than the 0.1% decline expected.

On a three-month rolling basis, GDP grew 0.7% as expected, which was unchanged from the previous three months.  

Industrial production fell 0.6% month-on-month, though this was an improvement from the prior month, while on an annual basis was down 0.3% compared to a 0.7% fall in March. 

The index of services was down 0.4% on the month, worse than expected after a 0.4% gain in March. 

Construction output grew 0.9% though, following a 0.5% rise the previous month and better than expected.

The UK visible trade balance for April was a £23.2 billion deficit, worse than the average forecast of £20.7 billion and the prior month's £19.9 billion. The total trade balance was £7.0 billion in deficit, worse than the £4.5 billion estimate and the £3.7 billion deficit the month before. 

ONS director of economic statistics Liz McKeown said: "The economy contracted in April, with services and manufacturing both falling. However, over the last three months as a whole GDP still grew, with signs that some activity may have been brought forward from April to earlier in the year. 

"Both legal and real estate firms fared badly in April, following a sharp increase in house sales in March when buyers rushed to complete purchases ahead of changes to stamp duty. Car manufacturing also performed poorly after growing in the first quarter of the year."

As well as a strong month for construction, April also saw growth for retail, research & development. 

On trade, McKeown said: “After increasing for each of the four preceding months, April saw the largest monthly fall on record in goods exports to the United States with decreases seen across most types of goods, following the recent introduction of tariffs.”

7.15am: FTSE 100 expected to fall as GDP contracts 

The FTSE 100 is expected to fall on Thursday morning, in line with declines in the US and Asia, and following a 0.3% contraction in UK gross domestic product in April.

A 34-point fall has been called for London's blue-chip index on the futures market, which would wipe out the gains from the past two days, with the benchmark having added just over 11 points yesterday to close at 8864.35.

US stocks ended lower last night, with the tech-dominated Nasdaq down 0.5%, the S&P 500 losing 0.3% and the Dow Jones just below flat. 

Asian markets are mostly in the red this morning, with Japan's Nikkei down 0.6%, Hong Kong's Hang Seng falling 0.9% and Chinese domestic stocks flat. UK GDP figures showed output from both services and manufacturing sectors falling, while goods exports fell by £2 billion, likely linked to US tariffs. 

5am: What to watch on Thursday 12 June

A first-quarter trading statement from Tesco PLC (LSE:TSCO) comes after the grocery giant warned that increased competition is likely to hit profits this year.

The question is whether this update will show any signs of this or whether, as one analyst put it, the UK's largest supermarket will have "got the knuckledusters out" to see off its smaller rivals. 

Elsewhere, there will be full-year numbers from Halma PLC (LSE:HLMA), which said these results would represent its 22nd consecutive year of record adjusted profit, with adjusted EBIT margin expected to be "modestly above 21%" and organic revenue growth to be "good".

In economic data, UK GDP and trade data for April and US factory gate prices will be under the microscope.   

Announcements due:

Trading updates: Tesco

Interims: Benchmark Holdings, Crest Nicholson, IDOX

Finals: Halma, Mind Gym, Motorpoint, Norcros, Paypoint

Overseas earnings: Adobe, Kroger

Economic announcements: RICS Housing Market Survey (UK), Balance of Trade (UK), GDP (UK), Index of Services (UK), Industrial Production (UK), PPI (US), Jobless Claims (US)

FTSE 100 ex-dividends to reduce index by: 1.23 points (Land Sec, JD Sports, Intermediate Capital, Scottish Mortgage)