FTSE 100 up 36 points at 10,772
Oil prices drop as US and Iran pause strikes
AstraZeneca and Vodafone report as results season ups a gear
9.42am: ‘A major shift in financial markets’
Initial gains for the FTSE have been chipped away, with the London index up around 0.3% now, with the pace in Europe being set by Germany’s DAX and Spain’s IBEX, both up over 1%.
The Stoxx 600 is up 0.5%, with software and technology names leading the rally, including SAP, Nemetschek and Wolters Kluwer.
Oil producers are putting on the brakes, with Equinor down 5.2%, Vår Energi off 4.9%, Eni losing 4.2% and BP falling 3.5%.
“There has been a major shift in financial markets this morning,” says analyst Kathleen Brooks at XTB, citing reports that the US and Iran have agreed to a pause in hostilities after two weeks of strikes.
“This has dramatically reduced the geopolitical risk premium,” she says, with the Brent crude oil price down 10% from where it was on Friday morning.
“The question now is, will the de-escalation in tensions between Iran and the US have a longer-term dampening impact on the oil price, and will it lead to reduced inflationary concerns as we lead up to some key central bank meetings?”
For now, the Strait of Hormuz is still under a blockade, with Houthi attacks in the Red Sea keeping investors worried about commodity supply risks.
“Although the situation in the Middle East has calmed, it has not been resolved, and it could make a decline below $85b per barrel tricky at this stage,” Brooks says.
However, as she points out, we have been here before and the abandonment of the ceasefire and resumption of military strikes in the last two weeks “have reminded us that geopolitical risks are never far away, and relations between the US and Iran remain incendiary”.
9.08am: Vodafone encouraging
Vodafone is top of the blue-chip risers, following what analyst Matt Britzman at Hargreaves Lansdown calls “an encouraging start to the year, with every part of the business growing and profits rising faster than revenue”.
“Stable growth from Germany was key and better than expected, as demand for broadband picked up and income from other network providers helped balance a competitive mobile market.
“The UK also moved forward, with the integration of Three on track, and early network upgrades already improving speeds for customers.
“There’s still work to do, but the direction of travel is positive, and we should see some consensus upgrades off the back of these numbers.”
8.36am: AZ inching away from recent lows
AstraZeneca shares climbed almost 2% to 12,922p, their highest since the failed Wainua trial (though by no means all the way, as the shares were at 14,240p before that news), after the drugmaker’s first-half results.
Analyst Michael Leuchten at Jefferies says higher income from partnerships and a slightly better profit margin were offset by higher selling and administrative costs, although a lower tax bill helped earnings beat expectations by 5%.
With the 2026 outlook kept unchanged, he says this means the City revenue consensus forecasts sit near the bottom of its guidance range while earnings forecasts are “towards the midpoint” if assuming constant currency rates.
He also highlighted AstraZeneca’s assessment of tozorakimab as a potential $5 billion-plus respiratory opportunity ahead of an upcoming presentation.
Adam Vettese, market analyst at eToro, says the results “look reassuringly solid”.
He flags double-digit oncology gains from Imfinzi, Calquence and Tagrisso, more than offseting the expected Farxiga patent hit and China pressures.
“That said, the recent Wainua heart drug failure still hangs over the stock. Growth is clearly moderating, and investors will stay laser focused on the remaining big oncology trial readouts later this year.”
8.15am: FTSE 100 springs higher at open, led by Vodafone
The FTSE 100 has begun the week with a spring in its step, advancing 51 points to 10,787 despite sizeable declines for oil and gas names.
Driving the index higher are gains for AstraZeneca, up 1.1%, travel-related names like IAG and Rolls-Royce, up 3.2% and 2.6%, as well as banks, miners and retailers.
Vodafone is at the front of the pack, up 3.6% following its upbeat update.
At the other end of the table, BP and Shell are down 3.7% and 1.9%, with British Gas owner Centrica falling 1.5% and commodities giant Glencore falling 1.4%.
7.55am: AstraZeneca delivers Q2 beat, ‘on track’ for full year
AstraZeneca has reported a better set of second-quarter earnings than expected, with growth in oncology and rare diseases helping offset weaker sales elsewhere.
Core earnings per share increased 21% to $2.63 in the second quarter, ahead of the average City analyst forecast of $2.48. Revenue rose 6% to $15.4 billion, narrowly below the $15.4 billion predicted.
Chief executive Pascal Soriot says the company was disappointed by the failure of the key CARDIO-TTRansform trial earlier this month, which has seen more than 11% of the group’s valuation shaved off, but across the group is “on track to deliver our $80 billion total revenue ambition, which assumes successes and setbacks”.
7.31am: Vodafone eyes top end of guidance
Vodafone has got off to a strong start to its financial year and says it now expects to reach the upper end of full-year guidance.
Organic service revenue increased 5.2% in the first quarter, with growth recorded across every segment, and inching up from 5.1% in the final quarter of the past year.
Reported service revenue rose 9.8% to €8.6 billion, while total revenue climbed 9.7% to €10.3 billion, helped by the merger of its UK business with Three.
Underlying profits on an EBITDAaL basis increased 6.7% to €2.9 billion, or 6.2% on an organic basis.
FTSE 100 Live: Flying start expected to busy week
The FTSE 100 is set to hit the ground running on Monday, starting what will be a busy week of corporate and central bank news on a bright note after a pause in US attacks on Iran sent oil prices sharply lower and lifted global equity markets.
London’s blue-chip index has been called 43 points higher on the futures market on Monday, while European and US stock futures are also pointing to solid gains.
Brent crude has fallen 5.5% to $91.54 a barrel after Washington halted its bombing campaign on Friday without explaining the decision.
Iran has also indicated it will not retaliate further, raising hopes of a shift towards diplomacy.
However, the geopolitical picture remains highly uncertain, with minimal traffic through the Strait of Hormuz and reported attacks in the Red Sea and Yemen’s Houthis announcing a naval blockade against Saudi Arabia.
The calmer weekend and retreat in energy prices supported government bonds, with the US two-year yield down five basis points and UK 2yr falling 11bps from Thursday’s two-month high.
European markets are expected to join the rally, with Germany’s DAX called more than 1% higher and France’s CAC 40 seen up 0.8%. Across the pond, Dow futures have added 0.8%, S&P 500 futures rose 0.9% and Nasdaq futures climbed 1.45%.
UK reporting season kicks up a gear this week, with AstraZeneca, Vodafone and Cranswick leading Monday’s UK company news. Others coming later in the week include Unilever, GSK, Rio Tinto, Lloyds, Standard Chartered, BAE Systems, LSEG, IAG, NatWest and Rightmove.
Central banks will also dominate the business agenda, with the US Federal Reserve decision on interest rates on Wednesday, the Bank of England on Thursday and the Bank of Japan on Friday.