London close: Stocks surge on peace deal hopes as oil prices slide

(Sharecast News) - A big drop in the price of oil and renewed hopes for an imminent peace deal between the US and Iran lit a fire under global stock markets on Wednesday, with London's FTSE 100 jumping 2.2%. The UK benchmark index settled 219.55 points higher at 10,438.66 - its highest close since 23 April - as mining and banking stocks soared. All major indices across Europe rose around 2-3%, while Wall Street's S&P 500 and Nasdaq heading for another record finish.

By the close of play in London, Brent crude was trading around 7% lower at $102.22 a barrel, hitting lows not seen since 27 April, following a report the US and Iran are close to reaching a deal to end the war.

Axios, citing two US officials and two other sources briefed on the issue, said the White House believes it's getting close to an agreement with Iran on a one-page memorandum of understanding to end the war and set a framework for more detailed nuclear negotiations.

It was understood the US expects Iranian responses on several key points in the next 48 hours. Nothing has been agreed yet, but sources told Axios this was the closest the parties had been to an agreement since the war began.

Among other provisions, the deal would involve Iran committing to a moratorium on nuclear enrichment, the US agreeing to lift its sanctions and release billions in frozen Iranian funds, and both sides lifting restrictions around transit through the Strait of Hormuz.

Sentiment had already been boosted early on after Donald Trump said he was pausing 'Project Freedom' to open the Strait of Hormuz as "great progress" was being made towards a "complete and final agreement with the representatives of Iran".

"This is a news-driven market and another leg lower for oil and a leg higher for stocks will depend on the news that is coming out of the Middle East. The news so far on Wednesday suggests an abrupt deescalation compared to earlier this week," said Kathleen Brooks, research director at XTB.

"We have been promised peace deals before, which have then failed to materialise, so while the market is wiling to trade on the back of this deescalation, 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 per barrel for Brent crude."

Miners, banks jump

Gold miner Fresnillo and miners Antofagasta and Anglo American all rose as gold and copper prices advanced, while banking stocks HSBC, NatWest, Barclays and Lloyds all surged on the improving macro outlook, rebounding after a heavy fall the previous day.

Airlines IAG, Wizz Air and easyJet also flew higher as oil prices tumbled, allaying concerns about fuel costs. In contrast, energy majors BP and Shell took a tumble on the FTSE 100, along with FTSE 250 groups Ithaca, Harbour Energy, Energean and Diversified Energy.

Diageo fizzed higher as the Guinness owner reported better-than-expected third-quarter growth, fuelled by strong demand across Europe and Latin America ahead of the football World Cup.

Smith & Nephew was down after underwhelming investors with an in-line first-quarter update. The medical devices group also backed its full-year outlook and announced a new $500 buyback.

Online rail ticket platform Trainline lost ground as it cautioned the Iran war and a series of policy measures in the UK would hit sales this year.

Telecom Plus was knocked lower by a downgrade to 'hold' from 'buy' at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 10,438.66 2.15% FTSE 250 (MCX) 22,832.42 1.73% techMARK (TASX) 5,959.32 0.96%

FTSE 100 - Risers

Fresnillo (FRES) 3,462.00p 11.30% Smurfit Westrock (DI) (SWR) 3,094.00p 7.99% Prudential (PRU) 1,184.00p 7.39% Anglo American (AAL) 3,827.50p 7.38% Antofagasta (ANTO) 3,818.50p 7.33% Melrose Industries (MRO) 518.00p 7.27% Rolls-Royce Holdings (RR.) 1,279.20p 7.24% International Consolidated Airlines Group SA (CDI) (IAG) 390.80p 6.83% Diageo (DGE) 1,568.80p 6.34% NATWEST GROUP (NWG) 576.00p 5.69%

FTSE 100 - Fallers

BP (BP.) 551.30p -3.72% Smith & Nephew (SN.) 1,117.50p -3.62% Shell (SHEL) 3,211.50p -3.05% London Stock Exchange Group (LSEG) 9,340.00p -2.48% Relx plc (REL) 2,625.00p -1.83% The Sage Group (SGE) 886.60p -1.74% SSE (SSE) 2,534.50p -0.33% Experian (EXPN) 2,673.50p -0.24%

FTSE 250 - Risers

WH Smith (SMWH) 517.50p 9.49% Endeavour Mining (EDV) 4,678.00p 9.17% easyJet (EZJ) 373.60p 8.86% Pan African Resources (PAF) 148.48p 7.90% Close Brothers Group (CBG) 482.60p 7.15% Aston Martin Lagonda Global Holdings (AML) 44.64p 6.97% Genuit Group (GEN) 262.00p 6.94% SSP Group (SSPG) 159.30p 6.56% Hochschild Mining (HOC) 635.00p 6.45% Wizz Air Holdings (WIZZ) 969.00p 6.14%

FTSE 250 - Fallers

Telecom Plus (TEP) 1,042.00p -10.63% Ithaca Energy (ITH) 252.80p -5.88% Diversified Energy Company (DI) (DEC) 1,136.00p -5.02% Harbour Energy (HBR) 279.60p -4.77% TBC Bank Group (TBCG) 4,506.00p -4.17% Energean (ENOG) 857.50p -3.81% Ceres Power Holdings (CWR) 725.00p -2.75% The Schiehallion Fund Limited NPV (MNTN) 1.98p -2.25% NCC Group (NCC) 137.60p -2.13% AEP Plantations (AEP) 1,866.00p -1.79%