The FTSE 100 opened higher on Tuesday, gaining 0.86% to 10,556.60, as London markets resumed trading after the spring bank holiday. The index was lifted by a rally in oil-linked stocks and a notable advance in home improvement retailer Kingfisher.
Oil Surge Drives Gains
Brent crude climbed more than 2% to $98.21 a barrel in Asian trading, according to Reuters, following fresh US military strikes in southern Iran. The escalation dimmed hopes for a swift resolution to US-Iran negotiations, pushing crude prices higher. Energy and mining stocks, including Glencore and Endeavour Mining, were among the top performers on the FTSE 100, while BP lagged.
Kingfisher Holds Profit Target
Kingfisher, the parent company of B&Q and Screwfix, reported a 0.7% decline in first-quarter like-for-like sales, reflecting a still-weak market. However, the group maintained its full-year adjusted pretax profit target of between £565 million and £625 million. Screwfix posted a 4.1% increase in comparable sales, while B&Q saw a 4.1% drop, hurt by a slow spring that dampened demand for seasonal products. Investors will be watching for similar trends at other UK home improvement firms such as Wickes and Travis Perkins, where trade customers remain steady but DIY sales are softer and consumers remain cautious.
UK Shop Prices Rise
The British Retail Consortium reported that UK shop prices rose 1.2% in May compared to a year earlier, accelerating from a 1.0% increase in April. Food inflation eased to 2.7%. BRC chief Helen Dickinson said that cutting red tape could help bring inflation lower.
Market Outlook and Risks
London traders often see a mixed picture with this setup. While the FTSE 100 can get a lift from mining and energy stocks when commodities trade higher, retailers, airlines, and other firms more exposed to UK consumers may face pressure from higher costs for fuel, freight, and power.
Early gains could prove shaky if the rally depends on hopes for a quick peace. Joseph Capurso, a strategist at Commonwealth Bank of Australia, told Reuters he was “a bit sceptical” about the Iran talks, noting there is “a lot we don’t know.” Eric Robertsen at Standard Chartered flagged persistent “inflation and fiscal risks” that are not merely brief flashes tied to geopolitics.
If talks hit a wall, or the Strait of Hormuz remains tight, or crude holds above $100 for an extended period, downside risk could materialize quickly. Daniela Hathorn, senior market analyst at Capital.com, said the market’s “tolerance for negative headlines is shrinking.” William Bain at the British Chambers of Commerce agreed, stating there is “no quick fix” for the economic shock.
The CBI distributive trades survey, a monthly look at UK retail sales, is due at 1100 BST. For now, the UK market is holding steady, though the index’s strength is not coming from the most reassuring place.
