London Quick Take - Friday - UK Markets steady as FTSE rises; Dell surges over 30% on earnings beat

UK

FTSE 100

The FTSE 100 is slightly higher today up +0.25% at the time of writing, supported by cautious optimism after reports of a tentative US–Iran agreement to extend a 60‑day ceasefire, which could see the Strait of Hormuz remain “unrestricted”. The deal has yet to be approved by President Trump. 

Although the index has recorded consistent monthly gains since last July, it has still not fully recovered from the Iran-related selloff, unlike other major global indices it is still 4% below pre-war levels. 

Meanwhile, Bank of England Governor Andrew Bailey, speaking in Iceland, warned that persistent second-round inflation effects such as wage demands driven by higher living costs, could keep price pressures elevated.

Equities in Focus

Ocado shares surged 8.6% on a deal with Asda to add it to its network of online grocers. The agreement is expected to strengthen Asda’s online offering and intensify competition in the UK grocery market, though the increase is still 92% below its peak during the pandemic. 

Separately, AstraZeneca gained slightly +0.7% as its drug Imfinzi received US approval for treating early-stage bladder cancer.  

Gilts

Yields are falling across the curve today, supported by softer oil prices easing inflation concerns. Gilts are outperforming, with the 10‑year yields on track for its best month since February as expectations for further Bank of England tightening have scaled back. Short-dated bonds are leading the move, with two‑year yields set for their biggest monthly drop in over a year. However, despite the recent decline, yields remain elevated versus pre‑conflict levels.  

Long‑dated gilt yields surged to their highest since 1998 in mid‑May, reaching 5.87% amid global market pressure and concerns that Keir Starmer’s potential successor could increase spending. They later eased as geopolitical tensions softened, UK data weakened, and frontrunner Andy Burnham pledged to adhere to the government’s existing borrowing limits, after previously suggesting they could be adjusted to allow for higher defence spending.  

Sterling

Over the last month sterling is down around 1.4% against the dollar, as the dollar strengthens amid elevated oil prices denominated in dollars and ongoing Middle East uncertainty. The pound has underperformed most major currencies, weighed further by political concerns over Keir Starmer’s leadership, which could remain a key focus into June.  

Andy Burnham is expected to run in a by‑election on the 18th of June that may position him to challenge Starmer, something that could potentially weaken the pound, as investors may worry about increases to the budget deficit. On the same day, the Bank of England will announce its latest interest rate decision. While a hold is expected, any signals of further rate hikes could provide support to sterling by making UK assets more attractive to investors.  

US

Equities in Focus

Commodities

Oil

Oil prices have fallen, with Brent on track for its largest monthly drop since 2020, driven by optimism over a potential US–Iran ceasefire. Brent is down around 19% this month, although a 60‑day agreement has yet to be finalised and uncertainty remains over whether a deal will be reached. 

Despite the volatility, any ceasefire may not materially change the underlying situation, as both sides hold entrenched positions that may be difficult to reconcile.

Gold

Gold is set for a third straight monthly decline, pressured by focus on a potential US–Iran ceasefire. The metal is down over 2% this month. It is heading for a third consecutive monthly loss, as the US‑Israeli conflict with Iran has fuelled inflation concerns and reinforced expectations of further US rate hikes.