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European equities reach fresh peaks

European share indices have climbed to unprecedented levels in early trading, fueled by relief following the US-Iran peace agreement that is spreading through worldwide markets.

The broad Stoxx 600 benchmark has advanced 0.9 percent to 639 points, surpassing the prior peak recorded just before the Iran conflict erupted, with gains registered in London, Frankfurt, Paris, Madrid and Milan.

Mining and leisure stocks lead the advance, whereas energy firms are retreating.

This follows robust overnight performance in Asia-Pacific bourses, where Japan’s Nikkei climbed 5 percent amid expectations the Strait of Hormuz could reopen shortly.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, notes that global equities are beginning the week on a positive footing after President Trump confirmed an accord with Iran, stating:

The development has supplied investors with a clear signal to reduce the geopolitical risk premium that had weighed on markets, particularly as the Strait of Hormuz is anticipated to reopen and oil prices decline sharply.
Energy costs have served as one of the most direct routes from Middle East strains into inflation, bond yields and equity sentiment, and a coordinated push to drive prices lower is likely once the agreement is concluded.
Further specifics remain to be resolved before markets can place full confidence in the pact, yet the overall trajectory is evident: reduced oil costs, steadier sentiment and a fresh willingness to accept risk.

Key events

10m ago Accord expected to restrain mortgage costs
24m ago Reasons oil shipments may require months to normalise
46m ago US crude slips under $80
1h ago UK gilt yields decline
1h ago European equities reach record peaks
1h ago BP and Shell shares retreat
1h ago FTSE 100 index reaches eight-week peak
2h ago UK property values ease in June
2h ago Bourses advance throughout Asia
2h ago Opening note: Crude falls to three-month low

Accord expected to restrain mortgage costs

Home-loan customers can relax following the Iran peace agreement, according to Adam French, head of consumer finance at Moneyfactscompare.co.uk.

Although challenges persist, a durable settlement should sharply lower the chance of the Bank of England’s most adverse inflation and rate outlook materialising.
“In that scenario, Base Rate might have climbed to 5.25 percent, potentially lifting typical new mortgage rates toward 6.75 percent. Instead, today’s announcement indicates mortgage rates, already easing gradually for weeks, have probably peaked for now until another disruption arises.
“Borrowers may feel encouraged, yet caution remains advisable since inflation and economic figures will still shape the outlook. Nevertheless, lasting peace should eliminate one of the largest threats to borrowing costs and could foster a steadier setting for remortgage applicants and future purchasers.”

Even prior to this morning’s decline in UK gilt yields, average mortgage rates have eased modestly.

Moneyfacts reports:

The typical two-year fixed residential mortgage rate stands at 5.61 percent today, down from 5.62 percent the prior working day.
The typical five-year fixed residential mortgage rate stands at 5.58 percent today, down from 5.59 percent the prior working day.

Reasons oil shipments may require months to normalise

Donald Trump declared enthusiastically: “Ships of the World, start your engines. Let the oil flow!” last night, yet the practical reality is that restoring oil movements through the Strait of Hormuz to pre-conflict volumes will take time.

One factor is that numerous tankers are currently positioned incorrectly after the extended closure.

Another is that certain production and refining sites suffered damage during the conflict, while others were idled once storage reached capacity.

A further element is that insurers may remain cautious about renewed tensions and adjust premiums accordingly.

Neil Shearing, group chief economist at Capital Economics, clarifies:

Even with safe passage now available, tankers remain misplaced, energy facilities must regain full output, and uncertainty over insurance expenses and availability for vessels crossing the Strait will linger.
Our present baseline assumes roughly 80 percent of energy movements will resume by the close of Q3. Natural gas flows will recover more gradually after damage to Qatari installations earlier in the conflict, which local authorities indicate has removed 17 percent of production for two to three years.

US crude slips under $80

US crude oil has reached its lowest point since the second week of the Iran conflict.

West Texas Intermediate light sweet crude has fallen 6 percent today to $79.72 per barrel, the first time below $80 since 10 March.

This movement could help ease US petrol prices, which rose after fighting began and affected consumer confidence.

UK gilt yields decline

Today’s relief rally is also lifting government bond prices and thereby lowering borrowing expenses.

The yield on 10-year UK government debt has eased 6.5 basis points to 4.775 percent.

Two-year yields have dropped 8 basis points to 4.16 percent.

Lower yields signal that the expense of issuing fresh government debt has decreased, offering relief to the UK Treasury after the Iran conflict pushed borrowing costs higher.

Copper producer Antofagasta now leads risers on the FTSE 100, advancing nearly 8 percent.

Traders are concluding that an end to the Iran conflict will support global economic activity and therefore increase demand for commodities such as copper.

European equities reach fresh peaks

European share indices have climbed to unprecedented levels in early trading, fueled by relief following the US-Iran peace agreement that is spreading through worldwide markets.

Mining and leisure stocks lead the advance, whereas energy firms are retreating.

This follows robust overnight performance in Asia-Pacific bourses, where Japan’s Nikkei climbed 5 percent amid expectations the Strait of Hormuz could reopen shortly.

The development has supplied investors with a clear signal to reduce the geopolitical risk premium that had weighed on markets, particularly as the Strait of Hormuz is anticipated to reopen and oil prices decline sharply.
Energy costs have served as one of the most direct routes from Middle East strains into inflation, bond yields and equity sentiment, and a coordinated push to drive prices lower is likely once the agreement is concluded.
Further specifics remain to be resolved before markets can place full confidence in the pact, yet the overall trajectory is evident: reduced oil costs, steadier sentiment and a fresh willingness to accept risk.

BP and Shell shares retreat

Energy company shares are declining, however, with BP and Shell both down 3.7 percent as investors anticipate the conclusion of their earnings uplift from the Iran conflict.

FTSE 100 index reaches eight-week peak

Boom! Britain’s equity market has attained a near-two-month high at the open, as investors applaud the breakthrough between the US and Iran to conclude the Middle East conflict.

The FTSE 100 blue-chip index has risen 99 points, or almost 1 percent, to 10,570 points at the open, its highest reading since 21 April.

Engineering group Rolls-Royce, which manufactures and maintains jet engines, tops the FTSE 100 risers, up 5.5 percent, followed by British Airways owner IAG, up 4.8 percent.

UK property values ease in June

Gwyn Topham

Two pieces of positive information for Britons who do not own homes have emerged, with data indicating a June decline in house prices together with fewer tenants encountering rent increases last month.

Rightmove figures showed the average asking price of properties newly listed fell 0.6 percent or £2,113 to £376,191, the largest June drop in fourteen years, leaving prices 0.5 percent below the level seen this time in 2025. The sharpest reductions appeared in southern England and Wales, and among flats rather than houses.

The property portal noted that the volume of homes available remained at historically elevated levels for summer, creating more of a buyer’s market. Mortgage affordability has also improved slightly this month, with the average two-year fixed-rate deal falling around 0.1 percentage points to 5.07 percent, it said.

Meanwhile, data suggest the Renters Right Act may already be producing effects in limiting rent growth for tenants.

The legislation took effect at the start of May and restricts landlords to a single annual rent increase for existing tenants. According to the Hamptons monthly lettings index, the number of tenants facing a rent rise dropped 23 percent from the same month last year. Hamptons indicated that if the remainder of the year follows a similar pattern, only 31 percent of sitting tenants would encounter increases, compared with 40-50 percent in earlier years.

Yet the agency cautioned that rent rises in Scotland, where landlords have operated under a comparable regime for longer, exceeded the national average. Sitting tenants who experienced increases saw an average rise of 5.4 percent in May, though the figure reached 7.7 percent in Scotland, albeit from a lower base rent of £952 versus the Great Britain average of £1,375.

Regarding the ECB, president Christine Lagarde has cautioned that inflation pressures are broadening across the euro area.

In an interview with broadcaster France Culture, Lagarde warned that elevated energy prices are beginning to transmit into other sectors of the economy, noting:

“Indirect effects of inflation, we have absolutely started to see that more or less everywhere in recent weeks.”

The US-Iran agreement arrives at an opportune moment for the Bank of England, which is scheduled to set UK interest rates on Thursday.

Should the Strait of Hormuz reopen and oil flows approach pre-war volumes, inflationary pressure will diminish and the need for rate increases will lessen.

The European Central Bank raised rates last week, yet this week brings decisions from the BoE, the US Federal Reserve and the Bank of Japan.

Kathleen Brooks, research director at XTB, observes:

Over the past month the oil price has fallen more than a fifth, and Brent crude has returned to levels last seen in early March. This is welcome news for inflation, which should begin declining month by month from June onward, and it may ease worries about price pressures ahead of several major central-bank meetings this week. The drop in oil prices also prompts questions over whether the ECB acted prematurely in raising rates last week.

European equities are positioned for gains when trading opens in just over 20 minutes.

Germany’s DAX is indicated 1.65 percent higher in futures trading, Reuters reports, while the UK’s FTSE 100 is shown 0.75 percent firmer.

The US dollar is softening as investors move toward higher-risk currencies.

The pound has reached its strongest level in more than a week at $1.3438.

Bourses advance throughout Asia

Robust gains are evident across Asia-Pacific markets today as investors welcome the US-Iran agreement.

Japan’s Nikkei has surged 5 percent, as has South Korea’s KOSPI, while China’s CSI300 index is 1.9 percent higher.

Jim Reid, market strategist at Deutsche Bank, comments:

Although the deal represents very positive news for markets, difficult discussions will still be required during the 60-day window to ensure the peace holds. For instance, the Senate must approve any substantial sanction relief for Iran.
For the present, the postponement of difficult choices has been received favourably by markets even after a strong US close on Friday when hopes of a weekend signing were raised.