LONDON MARKET MIDDAY: FTSE 100 outperforms as US-Iran impasse persists

Mon, 18th May 2026 12:07

(Alliance News) - European stocks were mixed on Monday afternoon, with the FTSE 100 outperforming, as US-Iran tensions and tepid China data keep a lid on enthusiasm.

The FTSE 100 index traded up 24.83 points, 0.2%, at 10,220.20. The FTSE 250 was down 127.12 points, 0.6%, at 22,469.02, and the AIM all-share lost 7.85 points, 1.0%, at 801.04.

The Cboe UK 100 was up 0.6% at 1,016.50, the Cboe UK 250 lost 0.1% at 19,395.56, and the Cboe small companies was up 0.2% at 18,465.69.

In Paris, the CAC 40 was down 0.7%, while the DAX 40 in Frankfurt edged up 0.1%.

A barrel of Brent surged to USD110.52 on Monday from USD108.83 at the time of the London equities close on Friday.

Commercial oil stocks are falling "very fast" as Gulf supplies remain disrupted by the Middle East war, even with the release of strategic reserves by governments worldwide, the head of the International Energy Agency, Fatih Birol, said Monday.

Wealth Club analyst Susannah Streeter commented: "Brent Crude, the benchmark, has raced above USD111 a barrel, as fears of a fresh escalation in the Iran conflict take hold. Hopes of any kind of fast resolution have faded as Tehran and Washington appear poles apart in their demands. There had been some expectation that talks in China between Trump and Xi Jinping might help prompt a breakthrough, but that has not materialised.

"In the meantime, an attack on a nuclear power plant in the UAE has caused a fresh wave of worry. The ceasefire is falling apart at the seams, and nerves are frayed. A US waiver, which had enabled the temporary purchase of stranded Russian seaborne crude oil, has also expired, which further limits global supplies of oil. Rising crude prices, though, are a boon for listed energy giants, with BP and Shell gaining from fears of ongoing geopolitical fracture."

Iran's top security body announced on Monday the formation of a new body to manage the Strait of Hormuz, which Tehran has effectively closed and wants to charge ships to traverse.

On its official X account, the Supreme National Security Council shared a post for the Persian Gulf Strait Authority saying it would provide "real‑time updates on the #Hormuz_Strait operations and latest developments."

The account of the Revolutionary Guards navy shared the same post.

US President Donald Trump threatened "there won't be anything left" of Iran if no peace deal is reached, as their truce came under further strain with drone attacks on US allies in the Gulf.

Sterling rose to USD1.3354 early Monday afternoon from USD1.3319 late Friday afternoon. Against the euro, it bought EUR1.1476, up slightly from EUR1.1462. The euro rose to USD1.1632 from USD1.1622. Against the yen, the dollar rose to JPY158.92 from JPY158.68.

Streeter added: "Amid these heightened global tensions, the Downing Street drama is adding to the unpredictability. At a time when the UK needs stability and a doubling down on efforts to attract investment, it's having the opposite effect. Fears that the energy crunch would set off an inflation surge had already rattled bond markets."

UK Prime Minister Keir Starmer will fight on without setting a timetable for his departure, one of his most loyal Cabinet allies insisted as he urged Labour to "stop the own goals" after a week of internal strife.

In a stark warning to colleagues, the PM's deputy, David Lammy, said the ruling party would lose the next general election if the "internecine warfare" of the last 10 days continued.

The yield on the UK 10-year gilt spiked to just shy of 5.2% earlier on Monday, the loftiest level since July 2008.

Hurt by inflation worry, Barratt Redrow shares fell 3.0%, while fellow housebuilder Berkeley Group declined 1.7%.

The yield on the 10-year US Treasury stretched to 4.60% on Monday from 4.58% at the time of the London equities close on Friday. The 30-year yield widened to 5.13% from 5.12%.

ING analysts commented: "The top story in financial markets is the sell-off in the bond market. Losses have been led by the long end of the curve to deliver bearish yield curve steepening. While UK politics may be blamed for a small part of the global bond market sell-off, the bigger story is 10-year US Treasury yields rising to their highest levels since early 2025. This followed a raft of higher-than-expected US [producer price] inflation data last week.

"This kind of inflation is pressure-testing the Federal Reserve and swinging behind the three dissenters at the April FOMC meeting, against the implicit easing bias in the FOMC statement. Looking at the bearish steepening in the bond market today, the narrative is one of the Fed potentially 'falling behind the curve' and the need to at least sound hawkish, even if it does not necessarily hike."

In New York, the Dow Jones Industrial Average is called down 0.7% and the S&P 500 and Nasdaq Composite 0.5% lower.

In London, National Grid and Centrica rose 2.3% and 2.8%, as utilities rose amid cautious trade on Monday.

Whitbread shares fell 1.0%. Corvex Management urged the Premier Inn owner to put itself up for sale as it slammed its recently announced new five-year strategic plan.

In a damning letter to Whitbread management, the New York-based activist hedge fund called the status quo "untenable" and said that the need to pursue "meaningful strategic and structural reform had become unignorable".

As a result, Corvex, which holds an around 7% stake in Whitbread, said the only "credible" path to unlocking value at Whitbread is a sale of the company.

Anglo American fell 1.0% with miners on the decline as Chinese retail sales and industrial production data fell short of expectations.

In addition, Anglo found a new buyer for a steelmaking coal portfolio. It has struck a deal to sell its portfolio of steelmaking coal mines in Australia to Dhilmar for up to USD3.88 billion in cash. Dhilmar will pay the miner USD2.3 billion upfront, and the deal has a price-linked earnout of up to USD1.58 billion.

Peabody had backed out of a deal to acquire the portfolio last year.

Capita shares rose 6.5%.

The London-based outsourcing and business services company, which held its annual general meeting on Monday, said adjusted revenue rose 2.9% on-year in the first four months of 2026, which it said was in line with expectations.

Looking ahead, Capita said it continues to expect a low to mid-single digit revenue climb in Capita Public Service and expects mid-teen revenue growth in its Pension Solutions business.

Separately, the company announced that Daniel Wosner has joined the company as a non-executive director. Wosner is managing director and head of Europe at Oasis Management Ltd, an investment firm that has a 15.2% interest in Capita's issued shares.

Gold rose to USD4,547.28 an ounce on Monday from USD4,544.53 late Friday afternoon.

By Eric Cunha, Alliance News news editor

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