Britain stocks rise as peace deal hopes hit energy shares

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Britain stocks rise on peace hopes

Highlights

The FTSE 100 gains 1.1% to 10,414.02 and FTSE 250 rises 1.5%, boosted by hopes for a U.S.-Iran peace deal.
Energy shares fall 3.6% as oil prices decline over 4%, while homebuilders Vistry Group, Bellway, and Persimmon gain 6.6% and 4% each, respectively.
UK GDP contracts 0.1% in April, the first monthly drop since August 2025, as inflation expectations hit a record high according to the Bank of England.

Market moves and sector reaction

As reported by Reuters, the FTSE 100 rises 1.1% to 10,414.02 points by 1059 GMT, while the FTSE 250 climbs 1.5%, leaving both indexes on track for weekly gains.

Sentiment improves after U.S. President Donald Trump says a peace agreement with Iran could be signed soon. If confirmed, the deal could end the three-month-old war, which had driven oil prices sharply higher after Iran blockaded the Strait of Hormuz, a key route for global energy supply.

Most sector indexes trade higher, but energy falls 3.6% as oil prices slip more than 4%. Homebuilders lead the gains, with Vistry Group up 6.6%, while Bellway and Persimmon add 4% each.

The travel and leisure sub-index advances 3.6%, helped by lower oil prices. British Airways owner IAG and budget airline Wizz Air Holdings are among the top gainers.

Economic data add caution for UK outlook

On the macroeconomic front, Britain's economy contracts 0.1% in April, its first monthly decline since August 2025, data from the Office for National Statistics show. The figures also indicate the first clear signs that the U.S.-Israeli war on Iran is affecting the country's economic growth.

Danni Hewson, head of financial analysis at AJ Bell, says April's data points to a weak summer that could slide into a technical recession as global conflict meets domestic political uncertainty.

Separately, the British public's long-term inflation expectations rise to a record high last month, according to the Bank of England's quarterly inflation attitudes survey. The combination of softer growth and elevated inflation expectations adds to the policy challenge facing the central bank.

Our earlier coverage of the UK’s April GDP report noted that the economy contracted by 0.1%, ending the previous run without a monthly decline. We highlighted that the drop was driven by weaker services and production, while construction was the only major sector to expand, underscoring how high inflation and interest rates are weighing on activity.

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