FTSE drops 68 points to 10,600
Oil prices lifted by renewed worries over US-Iran talks
Renishaw, Plus500, Evoke updates in the news
11.00am: UK to flirt with recession
Britain’s economy will flatline for two consecutive quarters this year and unemployment will suffer its worst rise since the pandemic as the fallout from the Iran war takes hold, according to a leading forecasting group.
The Item Club, an independent economic research body, now expects GDP to grow by just 0.7% over 2026 as a whole, down from 1.4% last year, as soaring energy costs and supply chain disruption drag on activity.
The economy will “flirt with recession,” defined as two or more consecutive quarters of contraction, in the second and third quarters of the year.
Unemployment is forecast to peak at 5.8% by mid-2027, with almost 250,000 more people out of work.
The Item Club’s warning echoes a gloomy assessment from the International Monetary Fund last week, which projected UK growth of just 0.8% in 2026, the steepest downgrade among the G7 nations.
10.03am: Consumer confidence falls to 3yr low
UK consumer confidence has fallen at the start of April as households’ worries about inflation and jobs market have increased.
The Consumer Sentiment Index (CSI) from S&P Global has slid to a 33-month low, dropping to 42.3 points from 44.1 in March.
The CSI survey has been collected monthly since 2009 and is based on a panel of 1,500 UK households, tracking household financial wellbeing, labour market conditions, household spending, savings and debt.
Labour market sentiment turning pessimistic for the first time since July 2023, with increasingly negative contributions from all other gauges that make up the index.
“The conflict in the Middle East weighed heavily on confidence,” says economist Maryam Baluch.
“Increased energy-market disruption raises the odds of further spikes in fuel and utility bills, with headwinds keeping near-term inflation stickier than policymakers would like.
“Against this backdrop, households’ rate expectations have turned more hawkish, with a growing share of households now anticipating a tightening of monetary policy by the Bank of England.
“The strain on finances and an uncertain central bank policy outlook is showing up in consumer behaviour as households bear down on spending, particularly on big-ticket items, while running down savings at the fastest pace in a year. Debt undertakings, too, edged higher with the need for loans growing to the greatest extent in over two-and-a-half years.”
9.09am: Markets in a familiar pattern
After just over an hour of trading at the start of the week the early pattern is set.
The market has practised a very similar manoeuvre every few days as the Middle East conflict settled into a back-and-forth arrangement, as optimism about the war and the passage of tankers through the Strait of Hormuz has waxed and waned.
In London, that means: mining, travel-related stocks, housebuilders and some consumer stocks down, while energy and defensives like grocers, tobacco and utilities are up.
Today, “the situation has deteriorated”, says market analyst Kathleen Brooks at XTB, as traffic through the Strait of Hormuz is again at a standstill.
“Today’s jump in oil prices and the pullback in stocks is a reminder that the current ceasefire that expires on Wednesday is fragile.”
The latest round of peace talks in Pakistan is scheduled for today, but is now “in jeopardy”, she says, with a US delegation having arrived but Iran seemingly refusing to engage.
“Unless relations between the US and Iran improve in the next two days, we could see a resumption of the bombing campaigns from both sides, and more volatility for financial markets,” says Brooks.
“The diplomatic setback has knocked market confidence at the start of this week, and we expect to see an unwinding of some of Friday’s positions as the market rapidly prices out the prospect of energy supplies returning to normal. This has big implications for bond yields and interest rate expectations.”
The fact that the oil price has not yet crossed the $100 per barrel mark is also “significant”, she says, as it shows “some residual hope in the market that the ceasefire will hold”.
8.15am: FTSE drops as miners, builders and airlines fall
The FTSE 100 has dropped 44 points to 10,623 in opening trades, with miners, airlines, housebuilders and banks at the front of the latest retreat.
Copper miner Antofagasta, precious metals miner Fresnillo and British Airways owner IAG are leading the fallers, down 3.4%, 2.9% and 2.8% respecitvely.
Next, there are lenders including NatWest and Barclays, builders Barratt Redrow and Persimmon, aerospace parts makers Rolls-Royce and Melrose, gold miner Endeavour, and hotel owner IHG.
At the other end, Shell and BP are both up around 2.5%, with British Gas owner Centrica rising 1.5%, followed by defensive names BAT, Tesco, BT, National Grid, Imperial Brands and Sainsbury’s.
7.54am: Renishaw hikes, Evoke in talks
Renishaw has upgraded its guidance for the 2026 financial year after enjoying “particularly strong demand” in key markets.
The FTSE 250-listed precision engineer said in a short statement that trading since its half-year results in February has been most robust in semiconductor and electronics manufacturing equipment, alongside aerospace and defence.
This has driven a “substantial expansion” of the order book, it said, supporting higher expectations for the full year.
Elsewhere, William Hill owner Evoke says it is in talks about being taken over by Bally’s Intralot, a US-Greek gambling joint venture.
It mentions a possible offer at a price of 50p per share, expected to comprise an all-share combination with a partial cash alternative.
“Bally’s Intralot has confirmed to the company that it will, by no later than 5pm (London time) on 18 May 2026… either announce a firm intention to make an offer for the company or announce that it does not intend to make an offer.”
7.36am: Europe heading down, but Asian stocks up
Futures for Europe are down, including a fall of over 350 points expected for Germany’s DAX, but Asian markets are higher.
Tokyo’s Nikkei and Hong Kong’s Hang Seng are both up 0.6%, with the Shanghai Composite and Mumbai’s Sensex both nearer 0.5%.
“Tech-heavy indices, in particular, are doing just fine this morning – despite the jump in energy prices – as news on the AI front has been very encouraging,” says market analyst Ipek Ozkardeskaya at Swissquote.
“As long as oil prices remain below the $100pb level, investors seem willing to maintain – and even increase – exposure to technology names.”
She says last week saw a “questionable rally on hopes that peace was just around the corner”, but news over the weekend has “dampened that optimism, and the week opens on a mixed note with many unanswered questions”.
Iran says the Strait of Hormuz is closed again, not happy after a ship bound for its ports from China was seized by the US earlier.
Meanwhile, US President Donald Trump continues to threaten to destroy the country’s power plants and bridges if a deal is not agreed.
7.16am: FTSE 100 to start week lower as Iran refused to rejoin
The FTSE 100 is likely to begin the week on the slide, though with much larger drops for mainland European markets, as oil prices rebound after Iran said it would not participate in peace talks due to the US blockade in the Gulf.
Trading on Sunday and early on Monday has seen Brent crude oil bounce back above $95 a barrel, after dropping below $87 at the end of last week.
London’s blue-chip index is expected to fall around 40 points on Monday morning, reversing around half the 78 points gained on Friday, which finished at 10,667.63.
US stocks finished the week even more strongly, with the Dow Jones jumping 1.8%, the S&P 500 climbing 1.2% and the Nasdaq Composite 1.5%, as geopolitical tensions showed signs of easing.
But tensions in the Middle East escalated over the weekend, after the US seized an Iranian cargo ship near the Strait of Hormuz, leading Tehran to threaten retaliation just as Washington said it was sending a delegation to Pakistan for a second round of truce talks.
Tehran also said it would not attend the talks, with the state IRNA news agency writing: “Iran stated that its absence from the second round of talks stemmed from what it called Washington’s excessive demands, unrealistic expectations, constant shifts in stance, repeated contradictions, and the continuing naval blockade, which it considers a breach of the ceasefire.”