Closing post
With European markets closed, that’s all for today.
Our Middle East liveblog has the latest on the Israel-Iran conflict:
Here’s our explainer on how the crisis could affect the oil price, and the knock-on impacts:
And here’s more of today’s news:
Wall Street remains in the green too; the Dow Jones industrial average is now up 363 points, or 0.86%, at 42,561 points.
“‘Resilient’ could be the word of the day today, with markets on both sides of the Atlantic putting on a decent show despite the backdrop of global instability,” says AJ Bell head of financial analysis Danni Hewson.
“The fact that so far key oil infrastructure hasn’t been targeted in the escalating conflict between Israel and Iran has been notable, and the oil price has been pared back today. But Brent Crude is still trading significantly up on where it was at the start of the month and that’s already raising the spectre of another cost-of-living crisis in the UK.
“Households now have a keen understanding of what conflict in another part of the world can mean for bills back home. Inflation was already going to be in focus this week as we get May’s data on Wednesday morning followed by the latest decision by the Bank of England on where interest rates will go next a day later.
“Markets are now pricing in a slim chance that the MPC will make a move on Thursday after disappointing jobs and growth data coupled with concerns that economic conditions could deteriorate later in the year if the oil price remains under pressure.
“The black stuff lubricates the wheels of our lives, providing energy to create, ship and package goods. If it becomes more expensive then that will impact prices in all sorts of areas.”
FTSE 100 ends near record high as geopolitical fears subside
The FTSE 100 has crept closer to a new closing high today, but fallen just short, as investors’ anxiety over the Middle East crisis faded today.
London’s index of leading blue-chip shares has ended the day up 24.5 points, or 0.28%, at 8875 points. That leaves the FTSE 100 slightly short of the record closing high, 8884.92, set last week.
Stocks rose in the City amid a wider rally, following reports that Iran is seeking an end to hostilities with Israel and resumption of talks over its nuclear programme.
Airline operator IAG (+1.5%) was among the top risers, along with financial stocks such as Standard Chartered (+3%), Barclays (+1.97%) and M&G (+1.9%).
Other European markets also strengthened; Germany’s DAX and France’s CAC were both up around 0.8% in late trading.
Stocks pushed higher after the Wall Street Journal reported that Iran has been urgently signaling that it seeks an end to hostilities and resumption of talks over its nuclear programs.
Reuters has been told that Iran has asked Qatar, Saudi Arabia and Oman to press US President Donald Trump to use his influence on Israel for an immediate ceasefire in return for Tehran’s flexibility in talks about its nuclear program.
That also pushed down the oil price; Brent crude is down 3.2% at $71.79 per barrel, having jumped around 7% last Friday after Israel launched an attack on Iran, hitting 100 major targets, including nuclear facilities and missile sites, and killing senior military commanders and scientists.
Updated
UK prime minister Keir Starmer has declared that Britain and the United States should “very soon” finalise the implementation of a trade deal agreed last month.
Speaking to reporters in Canada, on the sidelines of a Group of Seven (G7) meeting, Starmer said:
“I’m certainly seeing President Trump today, and I’m going to discuss with him our trade deal.
“I’m very pleased that we made that trade deal, and we’re in the final stages now of implementation, and I expect that to be completed very soon.”
Once finalised, that deal should lower the tariffs on UK-made cars, steel and aluminium.
Shares rise and oil falls on report Iran is seeking talks
Shares have jumped higher in New York, and the oil price is sliding faster, following a report that Iran has signalled it wants to de-escalate hostilities with Israel and negotiate.
The Wall Stret Journal is reporting that Iran has been urgently signaling that it seeks an end to hostilities and resumption of talks over its nuclear programs, sending messages to Israel and the United States via Arab intermediaries.
This is pushing equities up on Wall Street, where the S&P 500 share index is now up 69 points or 1.1% at 6,046 points.
Oil has weakened, though – with Brent crude having now fallen by 3.4% today to $71.70 per barrel. That wipes out about half of its jump on Friday.
Updated
With a little over an hour’s trading to go, London’s stock market is flirting with a new record high.
The FTSE 100 index of blue-chip shares has now risen to 8881 points, up 0.35% today.
That puts the Footsie just 3 points away from the record closing high of 8,884 points set last week [the alltime intraday high, of 8,908 points, is a little further away].
Wall Street opens higher
Over in New York, the stock market has opened higher as geopolitical anxiety appears to ease.
The Dow Jones industrial average has risen by 265 points, or 0.6%, in early trading to 42,463 points.
The broader S&P 500 share index has gained 0.6%.
David Morrison, senior market analyst at fintech and financial services provider Trade Nation, reports that traders have been snapping up shares following the drop in values since Friday morning.
Morrison says:
The selling continued as markets reopened late on Sunday. But traders then bought into the dip, increasing their long side exposure once again. Time will tell if this is short-term opportunism, or a more general uptick in risk appetite.
Hostilities between Israel and Iran continued over the weekend. Despite this, it appears that market participants are less concerned about the possibility of the violence spreading throughout the region than they were last week.
It appears that most of the airstrikes and missiles have avoided the most significant parts of Iran’s energy infrastructure. But there are fears that this could change. In addition, Iran has threatened to disrupt, or even shut down, the Strait of Hormuz, through which around 20% of global oil is transported. But some analysts think that this is unlikely, given that this is an important route for Iranian oil to China, its major customer.
Israel’s government bonds are also rallying today.
Reuters reports that an Israeli bond maturing in 2054 has risen by more than 1% today.
Israel’s currency is on track for its best day against the US dollar since the 2008 financial crisis.
The shekel has gained around 3% today, rising to 3.51 to the dollar, up from 3.61 on Friday.
The shekel had weakened last Friday after Israel launched its attack on Iran, on fears that its economy could be hurt if the conflict escalated.
Analysts also suggested that the clashes could push back the timeline for monetary easing by the Bank of Israel; higher interest rates tend to support a currency.
Oof! Business activity continued to decline in New York State in June, new data shows.
The latest Empire State Manufacturing Survey, just released, indicates that business conditions in the state declined again this month,
Firms reported that new orders and shipments declined, and supply availability worsened – possibly a sign that Donald Trump’s trade war continues to hurt the US economy.
Overall, the Empire State headline general business conditions index fell seven points to -16.0, from -9 in May, weaker than expected.
US June Empire State Factory Index at -16, below estimate of -5.5
— Fifteenmin (@Fifteenmin_news) June 16, 2025
-15min News
In brighter news, though, the survey also found that firms have turned optimistic about the outlook, with the future general business conditions index rising above zero for the first time since March.
Empire State Manufacturing index fell to -16.0 in June—4th monthly drop. Orders & shipments down, but jobs rose for first time since Jan. Firms optimistic: future outlook index hit 21.2. Inflation pressures eased slightly. pic.twitter.com/dd9A3PY4gD
— Econoday, Inc. (@Econoday) June 16, 2025
The survey was conducted between 2 and 9 June, after the US and China agreed their trade war truce in Geneva last month, but before their latest meeting in London last week had concluded.
The Israel-Iran conflict, and its impact on oil prices, looms over central banks such as the Bank of England, which is scheduled to set interest rates on Thursday.
The BoE is expected to leave borrowing costs unchanged this week, with a cut possible at its August or September meetings.
Professor Costas Milas, of the University of Liverpool’s Management School, tells us:
As the war between Israel and Iran continues, the outlook for oil prices is bound to become extremely uncertain. Notice that the Bank of England’s latest (in May) Monetary Policy Report assumes (Brent) oil prices of $64 per barrel for both 2025 and 2026.
This is much lower than today’s oil price of $74.60. If the conflict continues, there are clear, and adverse, implications for (UK) inflation and GDP growth. It looks certain that the MPC will keep interest rates unchanged this week. The next decision is in early August.
Nevertheless, if the war escalates, the MPC can still run an unscheduled meeting in July to deal with potentially hugely adverse effects on inflation and growth.
European natural gas prices have risen today, as the energy markets continue to be influenced by events in the Middle East.
Benchmark futures rose as much as 3.4% on Monday to the highest since early April, after jumping 4.8% on Friday. Open hostilities between Israel and Iran entered a fourth day with no sign of easing, stoking fears of a broader conflict in the energy-rich region.
For gas traders, the biggest concern is that a further escalation could disrupt shipments through the Strait of Hormuz, a key waterway for seaborne supplies. While physical delivery of liquefied natural gas doesn’t currently appear to be affected, any interruption would strain the market at a crucial time in Europe’s stockpiling season.
“If the narrow passage is closed, it would have a severe impact on markets,” said Arne Lohmann Rasmussen, chief analyst at Global Risk Management in Copenhagen. “We are seeing a growing risk that the market may become concerned about storage levels as winter approaches.”
The dip in the oil price today is lifting shares in some airlines.
IAG, which owns British Airways, are up 2.5% today, with Germany’s Lufthansa up 1.4%.
Encouraging news: Businesses have grown less pessimistic about the world economy’s near-term outlook.
That’s according to Oxford Economics’ June Global Risk Survey, which shows that the de-escalation of tensions between the US and China have lifted growth expectations.
The Risk Survey found that businesses are confident that recession risks have declined. Respondents see less than a 15% chance of global recession this year, compared with more than 25% in April.
However, sentiment remains weaker than earlier in the year, before Donald Trump’s ‘liberation day’ tariff hike announcements at the start of April.
European share move higher as markets stablilise
European shares are “surprisingly resilient” today against a backdrop of uncertainty,” says Russ Mould, investment director at AJ Bell.
That resilience has helped to push the major European stock markets higher this morning, as they recover from Friday’s wobble.
Mould points out that despite a weekend of violence between Israel and Iran, investors show no signs of panicking; future prices imply a positive day for Wall Street when US markets open later on.
Mould writes:
“The gold price is often a measure of investor sentiment, going up when people are worried and going down when they’re optimistic. The precious metal slipped 0.6% to $3,432 per ounce which indicates that investors remain alert to ongoing geopolitical tensions but they’re not reaching for their tin hats.
“The Middle East conflict remains a fluid situation and there is the potential for markets to still experience sudden jolts if the tension escalates further.”
But as things stand, the UK’s FTSE 100 index is now up 0.5% or 42 points, at 8,893 – closing in on its alltime high.
Germany’s DAX is 0.3% higher, while France’s CAC has gained 0.7%.
Updated
With shares up this morning, and the oil price now down, investors will be pondering how much weight to put on geopolitical issues.
According to a new research note from Deutshe Bank, geopolitics historically onla has a wider market impact when it affects macro variables like growth and inflation.
Deutsche Bank’s Henry Allen writes:
So for markets, the geopolitical events that mattered were the stagflation shocks, like the 1970s oil crises, the Gulf War in 1990, and Russia’s invasion of Ukraine in 2022.
Today, we haven’t seen a shock on that scale so far. Brent crude oil prices are still beneath their 2024 average of around $80/bbl. So this isn’t causing wider inflationary problems yet. Clearly, a larger price spike would evoke the 2022 scenario where central banks hiked rates to clamp down on inflation. But so far at least, we’re yet to see that. If anything, the extent of the market’s resilience to repeated shocks in 2025 has been a significant story in itself.
Risk appetite improving slightly in the markets.
The risk-off sentiment that gripped financial markets on Friday appears to be fading, even though Israel and Iran have continued to launch attacks at each other.
After rising in early trading, the oil price has now dipped by almost 1% today, with Brent crude back down below $74/barrel. That still leaves it up over 6% since Thursday night, just before Israel launched its attack on Iran.
Achilleas Georgolopoulos, senior market analyst at Trading Point, reports:
Risk appetite appears to be improving slightly today, with the dollar losing a bit of ground, both oil and gold surrendering a decent portion of their recent gains, and bitcoin climbing to the $106k area again. However, this risk-on reaction could quickly reverse, especially if Iran openly threatens to block the Hormuz Straits.
Updated
Israel furious as France shuts four stands at Paris Airshow
Over at the Paris Air Show, a row has broken out after four Israeli company stands at the trade fair were shut down.
According to Reuters, French authorities ordered that the four stands should be closed for “displaying offensive weapons”, after not complying with an order from a French security agency to remove offensive or kinetic weapons from the stands.
Israel’s defence ministry said it had categorically rejected the order to remove some weapons systems from displays, and that the show’s organisers had responded by erecting a black wall to block off the company stands.
In a statement, the ministry said:
“This outrageous and unprecedented decision reeks of policy-driven and commercial considerations.
“The French are hiding behind supposedly political considerations to exclude Israeli offensive weapons from an international exhibition - weapons that compete with French industries.”
Three smaller Israeli stands, which didn’t have hardware on display, and an Israeli Ministry of Defence stand, remain open, Reuters adds.
While the markets are calmer today than last Friday, investors are still trying to evaluate the risks from the Middle East.
That’s a difficult task, as Daniela Sabin Hathorn, senior market analyst at Capital.com, explains:
Whereas economic metrics allow for at least some predictive modelling, geopolitical instability—especially when involving major powers such as the U.S. and Iran—introduces a layer of uncertainty that resists quantification.
This latest conflict has direct implications for energy markets. The strikes targeted Iranian nuclear infrastructure, allegedly in response to Iran nearing the capability to produce a nuclear weapon. In retaliation, Iran has threatened to close the Strait of Hormuz—a key global shipping route. Meanwhile, Israeli forces have reportedly targeted Iranian gas and oil refineries, raising concerns over a major supply disruption.
Although Iranian oil has technically been sanctioned for years, a substantial volume has continued to reach global markets through circumventive channels. Therefore, any credible threat to halt this flow could have profound effects—both as a supply shock and a trigger for inflationary pressures worldwide.
Peel Hunt: We're seeing greater institutional positivity towards the UK
Global investors are taking a more positive view of UK assets, investment bank Peel Hunt reports.
In its latest financial results, Peel Hunt points says Europe is benefiting from the ‘rotation out of US assets’ in recent months (driven, it seems, by concerns over Donald Trump’s policy agenda).
Peel Hunt says:
Following the challenging market conditions of February and March, FY26 has started more positively, with the Trump administration agreeing a number of trade deals, including with the UK, and with interest rates having been cut by the Bank of England.
We are seeing a rotation out of US assets into Europe and greater institutional positivity towards the UK. ECM [equity capital market] activity in the UK remains generally subdued but could gain traction should macroeconomic conditions continue to stabilise. Meanwhile our M&A franchise remains highly active with a strong pipeline of transactions.
The interest in UK assets has led to more companies being taken over by overseas rivals this year.
Peel Hunt points out:
The increasing rate at which companies are exiting the London market presents a significant challenge for the UK economy.
Metro Bank shares jump on takeover approach report
The FTSE 250 index of medium-sized companies is also rising this morning, up 38 points (+0.2%) at 21,212 points.
Lender Metro Bank are the top riser, up 8.5%, after Sky News reported that it had received a takeover approach from Pollen Street Capital.
Metro, which became the UK’s first new high street bank in a century in 2010, has been through a troubled time – a major accounting blunder in 2019 led to its near-collapse, and it was fined nearly £17m by the UK’s financial watchdog in 2024 for money-laundering control failures.
But its fortunes have recently improved, after it returned to profitability; could it now join the exodus of companies from the London Stock Exchange?
Updated
Oil prices are pushing a little higher – Brent crude is now up almost 1% at $74.90 per barrel.
Markets rise despite Middle East tensions
European stock markets have begun the new week with modest gains, despite the attacks between Iran and Israel continuing.
In London, the FTSE 100 share index is 17 points (+0.2) higher at 8868 points.
Oil companies BP (+1.4%) and Shell (+1.4%) are among the FTSE 100 risers, tracking the rise in crude prices. Mining companies are also higher. Betting firm Entain has jumped 6% after lifting its forecasts for revenues and profits from its US joint venture, BetMGM, this morning.
In Germany, the DAX index gained 0.08%, while France’s CAC has jumped 0.3%.
Jochen Stanzl, chief market analyst at CMC Markets, reports that there is caution in the markets:
Investors are exercising caution following a weekend marked by mutual attacks between Israel and Iran. However, a complete sell-off has not materialized. The market currently anticipates a limited conflict, though there is little indication that hostilities will end quickly. It is expected that fighting will continue unabated this week, albeit on a limited scale.
Investors should not harbor hopes for a quick resolution to the situation in the coming days. Uncertainty in the market typically leads to increased volatility because planning becomes more challenging. The risk of an escalation beyond localized retaliatory actions remains; this includes the possibility of Iran targeting energy facilities, which could result in a sharp rise in oil prices. If oil prices surge past $100 per barrel again, Germany could face the threat of recession once more.
UK drivers could soon feel the impact of escalating tensions in the Middle East at the petrol station.
Brent crude oil has risen from below $64/barrel at the end of last month to around $74.50 this morning, which typically leads to higher fuel prices.
Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK explains:
“Just as tensions and uncertainty around global trade and tariffs seemed to be easing with a deal between the US and China on tariffs, the Israel/Iran escalation represents a new source of geopolitical tension. The main way this will impact UK businesses and the economy is through higher oil and natural gas prices. Indeed, oil prices have risen by about $10 per barrel (pb) in the last week. The most immediate impact will be on prices at the pump. A $10pb rise in oil prices will probably result in a 5p increase in pump prices over the next couple of months.
“A rough rule of thumb is that a $10pb rise in the price of a barrel of oil eventually adds 0.1% to inflation as higher fuel prices make their way through the system. Natural gas prices have also risen, but by a slightly smaller amount.
“However, to put this into context. This time last year oil prices were around $85pb and they are still way off their 2022 peaks of over $120pb. If oil prices stay at around these levels, it’s unlikely to make much of a difference to the Bank of England and the path for interest rates or economic growth this year.
Gold price eases back
The price of gold, a classic safe-haven asset, has dropped back today – perhaps a sign that market anxiety is easing.
As we blogged on Friday, gold jumped immediately after Israel launched its attack on Iran, as investors dashed into safer assets.
That move has slightly unwound today, wih gold down 0.5% at $3,415 per ounce.
It feels significant that gold remains below its alltime high, $3,500. Should it rise over that point, it will be a sign that the relative calm in the markets has fizzled out.
Updated
Markets in 'surprisingly muted response' to intensifying Middle East tensions.
As things stand… the oil price rally remains “limited” today amid mounting Middle East tensions, reports Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Ozkardeskaya explains:
Headlines were busy over the weekend as hostilities between Iran and Israel continued. An Iranian gas field in the Persian Gulf was hit on Saturday, fueling concerns that the escalation could spill over into global energy markets. While the damage appears limited to Iran’s domestic supply, the targeted gas processing facilities are linked to offshore oil production sites, potentially threatening broader energy flows.
US crude opened the week above $76 per barrel, and Brent crude briefly pushed above $84 per barrel. However, both benchmarks quickly gave back gains. Natural gas also spiked at the open, breaking above its 100-day moving average, before retreating. The US dollar edged higher on haven flows, while gold, which opened at record levels, is also paring gains.
The early trading reaction points to a surprisingly muted response from markets despite intensifying Middle East tensions.
Introduction: Oil price rise is "adverse shock" to global economy.
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
With the oil price rising again today, as attacks between Israel and Iran continue, economists are warning that the global economy faces an adverse shock, at an already difficult time for growth.
Oil prices have risen this morning, up around 1%, as the conflict between the two countries enters a fourth day.
Fears of disruption to supplies – a risk, if the Strait of Hormuz was to be closed – are making the oil price volatile. After a 7% surge on Friday, Brent crude is up another 0.5% on Monday morning at $74.60 per barrel, towards the five-month high touched early last Friday.
Iran accounts for about 3% of global oil supplies, while roughly 20% of global oil and LNG flows through the Strait of Hormuz, making it a crucial artery for the global economy.
Traders have noted that an Iranian gas field in the Persian Gulf was hit on Saturday, prompting Iran’s foreign minister to accuse Israel of seeking to expand the war beyond Iran.
Mohamed El-Erian, economic advisor to insurance giant Allianz, says the conflict risks causing slower global growth, increased inflationary pressure, reduced “policy flexibility” for central banks, and “further gradual erosion of the global order”.
He warned yesterday:
Two days into intensifying hostilities, both the probability and potential severity of these four effects have risen, confirming the notion that, in economic terms, this constitutes an adverse shock to an already fragile global economy.
Stock markets are, so far, showing some resilience on Monday. Japan’s Nikkei 225 index has gained over 1% today, while China’s markets are a little hgher.
Wall Street is set to open a little higher too; Tony Sycamore, analyst at IG, explains:
While the situation in the Middle East remains fluid, US S&P500 equity futures are trading about 0.95% higher this morning at 6036, likely buoyed by Israel’s early success in targeting Iran’s nuclear facilities, air defences, missile production, and military leaders to cripple strategic capabilities.
Additionally, while Israel has targeted Iranian energy infrastructure used domestically, it has refrained from targeting key Iranian oil export infrastructure.
The agenda
All day: Paris Air Show
1.30pm BST: NY Empire State manufacturing index
Updated
