Stocks soar and oil sinks on fresh peace deal hope

Stocks soared on Wednesday on renewed hopes a peace deal could be struck between the US and Iran to end the Middle East war.

The FTSE 100 closed up 219.55 points, 2.2%, at 10,438.66.

The FTSE 250 ended up 388.61 points, 1.7%, at 22,832.42, and the AIM All-Share rose 9.34 points, 1.2%, at 808.62.

Axios on Wednesday reported that the US believes it is getting close to an agreement with Iran on a one-page memorandum of understanding to end the Middle East war and set a framework for more detailed nuclear negotiations.

The one-page, 14-point memorandum of understanding is being negotiated between US President Donald Trump’s envoys Steve Witkoff and Jared Kushner and several Iranian officials, both directly and through mediators, the report said.

In its current form, the MOU would declare an end to the war in the region and the start of a 30-day period of negotiations on a detailed agreement to open the Strait of Hormuz, limit Iran’s nuclear programme and lift US sanctions, Axios said. Those negotiations could happen in Islamabad or Geneva.

AFP reported Iran Foreign Ministry spokesman Esmaeil Baqaei as saying that a US proposal to end the war is still “under review” by Tehran, citing local media.

Mr Trump himself issued an ultimatum for Iran to accept the deal to end the war or face intense renewed US bombing.

The report saw oil prices slide and equities soar.

Brent crude for July delivery was trading at 102.12 US dollars a barrel on Wednesday, down sharply compared with 110.70 dollars at the time of the equities close in London on Tuesday.

“No-one knows how this latest peace plan will pan out; however, the market is willing to trade on hope at this stage,” said Kathleen Brooks, research director at XTB.

But she cautioned: “We have been promised peace deals before, which have then failed to materialise, so while the market is willing to trade on the back of this de-escalation, it will take further concrete steps to end the war and reopen the Strait of Hormuz before the oil price can meaningfully fall below 100 dollars per barrel for Brent crude.”

In European equities on Wednesday, the CAC 40 in Paris ended up 2.9%, and the DAX 40 in Frankfurt jumped 2.1%.

In New York, markets were higher. The Dow Jones Industrial Average was up 1.2%, as was the S&P 500, while the Nasdaq Composite was up 1.5%.

Disney rose 6.4% as it reported better-than-expected second-quarter results, while Advanced Micro Devices soared 18% after its strong first-quarter earnings and upbeat guidance.

The yield on the US 10-year Treasury narrowed to 4.35% on Wednesday from 4.42% on Tuesday. The yield on the US 30-year Treasury was at 4.94% on Wednesday, down from 5.00%.

The pound firmed to 1.3602 dollars on Wednesday afternoon from 1.3569 dollars on Tuesday. Against the euro, sterling was lower at 1.1566 euros from 1.1586 euros on Tuesday.

The euro traded higher against the greenback, at 1.1756 dollars on Wednesday from 1.1707 dollars on Tuesday. Against the yen, the dollar was trading at 156.27 yen, lower than 157.66 yen.

London’s rally saw broad-based gains, with miners a strong feature.

Gold miner Fresnillo rose 11%, aerospace and defence manufacturer Rolls-Royce climbed 6.4%, British Airways owner IAG advanced 6.7%, lender Barclays added 5.5% and housebuilder Persimmon firmed 4.6%.

Retailer Next rose 4.4% as it nudged up full-year profit guidance after first-quarter sales grew more than it had forecast.

The Leicester-based clothing and homewares retailer said full price sales were up 6.2% in the 13 weeks to May on last year, and ahead of the group’s 4.0% forecast.

This reflected a strong start to the period, with sales in the first five weeks of the financial year up 11.8%.

The stronger sales came before the conflict in the Middle East started and last year’s UK sales strengthened as a result of unusually warm weather, the FTSE 100 listing explained.

JPMorgan analyst Georgina Johanan felt the “solid” statement was “somewhat reassuring” for the broader UK retail sector.

Diageo added 6.3% as it backed its annual outlook and reported better-than-expected third-quarter sales, despite spirits market weakness in the US.

The brewer and distiller, behind brands such as Guinness, Smirnoff and Tanqueray, said net sales rose 2.3% to 4.48 billion dollars in the financial third quarter ended March 31 from 4.38 billion dollars a year prior.

Diageo had been expected to report net sales of 4.27 billion dollars for the quarter, according to company-compiled market consensus. Organic net sales edged up 0.3%, however, beating expectations of a 2.3% decline.

Unsurprisingly, oil majors BP and Shell were prominent blue-chip fallers, down 3.7% and 3.1% respectively reflecting the lower oil price.

Smith & Nephew fell 3.6% as it reported in line first-quarter trading despite a drop in knee implant sales in the US.

On the FTSE 250, travel retailer WH Smith leapt 8.5% and airlines easyJet and Wizz Air soared 8.9% and 7.2% respectively.

But Telecom Plus plunged 11% as Deutsche Bank Research downgraded to “hold” from “buy” and slashed its share price target to 1,300 pence from 2,000p.

Elsewhere, Reach slid 9.9% as it reported “ongoing disruption in search and referral volumes” in its first quarter.

The publisher of the Daily Mirror, Daily Express and a raft of UK regional titles said revenue fell 6.9% on-year in the first quarter of 2026, with print down 6.6% and digital 8.1% lower.

On-platform referral volumes, mainly from Alphabet’s Google, were “materially lower” and reduced across the quarter, resulting in the 8.1% decline in digital revenue, it said.

Gold traded higher at 4,692.73 dollars an ounce on Wednesday, from 4,576.51 dollars on Tuesday.

The biggest risers on the FTSE 100 were Fresnillo, up 347p at 3,462p, Endeavour Mining, up 393p at 4,678p, Prudential, up 81.5p at 1,184p, Anglo American, up 263p at 3,827.5p and Antofagasta, up 257p at 3,818.5p.

The biggest fallers on the FTSE 100 were BP, down 21.3p at 551.3p, Smith & Nephew, down 41.5p at 1,117.5p, Shell, down 101p at 3,211.5p, London Stock Exchange, down 238p at 9,340p and Sage Group, down 22p at 886.6p.

Thursday’s global economic calendar has eurozone retail sales data, a slew of construction PMI readings and weekly initial jobless claims figures in the US.

Thursday’s local corporate calendar has full-year results from sports retailer JD Sports Fashion, first-quarter numbers from Holiday Inn owner InterContinental Hotels Group and oil major Shell plus a trading statement from insurer Hiscox.

Contributed by Alliance News