London’s equity market traded unevenly on Monday as a pronounced fall in crude futures exerted downward pressure on the energy sector, offsetting some market relief prompted by US indications of a diplomatic route toward Iran.
The FTSE 100 was volatile in the first hours of trade, registering a negligible decline of 0.02% as of 03:32 ET (07:32 GMT). That slight move left the UK index behind its continental peers, with Germany’s DAX up 1.31% and France’s CAC 40 rising 1% in the same session. The pound weakened modestly against the dollar, slipping 0.13% to $1.3466.
Commodity markets set the tone for London’s trading floor after oil benchmarks plunged overnight. Brent crude fell 4.8% to $83.69 a barrel, while US WTI dropped 5.9% to $79.66. The slump in crude translated quickly into losses for energy equities: Shell declined by 1.1% and BP shed 2.03%. Small and mid-cap producers felt the strain more acutely - Ithaca Energy lost 2.6% and Energean fell 1.1%.
The move in oil came after a post on Truth Social from U.S. President Donald Trump on Sunday saying he had called off a planned military strike on Iran, contingent on the "immediate, complete and total" reopening of the Strait of Hormuz and an end to Iran’s nuclear programme. Mr. Trump indicated on Monday that intermediary-led talks were set to start that afternoon.
Regional mediation efforts were also active. Qatari intermediaries submitted an updated proposal to Iran on Saturday intended to restore traffic through the strait, and Iranian diplomats were reported to have reacted positively to that draft. Nonetheless, a point of contention remains unresolved: Iran’s proposal to impose transit fees on vessels using the waterway, a demand strongly opposed by Washington. Complicating the picture, a tanker was reported to have experienced an explosion near the strait on Sunday.
United States Central Command said its naval blockade remained in effect, redirecting 35 commercial vessels, with two reported disabled and two boarded. The broader Gulf diplomatic picture also showed divisions among regional partners: Saudi Arabia continued to press for de-escalation, while the UAE urged more forceful action, and an Iranian diplomat warned that the Islamic Revolutionary Guard Corps was considering pre-emptive strikes regardless of US restraint.
Precious metals behaved differently from oil, with gold futures quoted at $4,114 an ounce, up 0.17%, and spot gold trading at $4,059.11, up 0.41%.
UK corporate headlines also influenced market moves. AstraZeneca shares tumbled almost 7% after a Financial Times report said the drugmaker had held merger discussions with Bristol Myers Squibb, though those talks may not produce a transaction.
In aviation, easyJet extended Castlelake’s deadline to make a firm takeover decision to August 7, aligning it with the timetable set by Apollo. The airline continued to provide due diligence access to both bidders after endorsing Apollo’s £5.7 billion proposal over Castlelake’s earlier £5.5 billion offer.
The early session therefore reflected a market negotiating multiple cross-currents: falling oil prices hitting energy balance sheets and smaller producers, geopolitical and diplomatic developments affecting trade routes and risk premia, and company-specific corporate action reshaping investor attention.