Oil Slumps as Hormuz Reopens After Iran Pact

Oil fell sharply as tankers moved through the Strait of Hormuz following the US-Iran peace agreement, with Brent back near early March levels. The S&P 500 and Nasdaq advanced on Thursday, helped by chip stocks, while Intel surged after news of a US chip partnership with Apple. The FTSE 100 fell as miners, technology shares and oil majors BP and Shell weakened. The yen stayed near a 40-year low despite the Bank of Japan’s rate rise.

Equities

The FTSE 100 closed 1% lower on Thursday at 10,399.70, while the FTSE 250 slipped 0.1% as investors assessed the Bank of England’s decision to leave interest rates unchanged at 3.75%. The central bank’s Monetary Policy Committee largely backed holding rates steady, with only two members voting for an increase.

London Stock Exchange Group fell 7% on Thursday, making it one of the sharpest declines on the blue-chip index after a broker downgrade from Rothschild Redburn. Tesco also came under pressure after reporting weaker-than-expected first-quarter sales growth. In the mining sector, Fresnillo closed 5.8% lower and Hochschild Mining dropped 7.2% as gold and silver prices weakened.

BP and Shell each finished 1.6% lower on Thursday after oil prices fell to their lowest levels since the start of the Iran conflict. Intertek gained 1.6% after agreeing to a takeover by Swedish private equity group EQT, while Informa rose 2.5% after forecasting stronger growth in 2027. Housebuilder Persimmon closed 6.1% lower as interest-rate-sensitive property stocks remained under pressure.

In the United States, Wall Street rebounded strongly on Thursday. The S&P 500 gained 1.08%, the Nasdaq Composite jumped 1.91% and the Dow Jones Industrial Average added 0.14%. The Nasdaq was lifted by a sharp rally in semiconductor stocks as easing oil prices helped calm inflation concerns following a peace agreement between the United States and Iran.

Intel surged 10.6% to a record high on Thursday after President Donald Trump said Apple had agreed to work with the chipmaker on designing and manufacturing semiconductors in the United States. The announcement also supported gains across the wider semiconductor sector.

Accenture fell 18% after trimming the upper end of its annual revenue forecast, making it one of the weakest performers in the S&P 500. The company’s outlook weighed heavily on technology services peers, with Cognizant Technology Solutions, Gartner and IBM closing between 4.5% and 10.5% lower.

Kroger declined 8.4% on Thursday after reporting first-quarter profit below market expectations while maintaining its full-year guidance. SpaceX shares fell 3.6% for a second consecutive session following strong gains in the days after the company’s stock market debut last week. The Russell 2000 small-cap index rose 2% and closed at a record high.

Forex & Commodities

The yen stayed under pressure early on Friday, trading near four-decade lows despite last week’s Bank of Japan rate rise. The Japanese currency moved up against the dollar to 161.1 yen, but remained close to levels that have kept markets alert to possible intervention from Japan’s Ministry of Finance.

The Bank of Japan raised interest rates to a 31-year high last week, but the move has not been enough to steady the currency. Fresh data showed Japan’s annual core inflation stayed below the central bank’s 2% target for a fourth month in May, helped by fuel subsidies that offset some of the pressure from higher raw material costs.

The US dollar index held at 100.8 early on Friday after reaching a one-year high on Thursday. The dollar was supported by a more hawkish tone from Federal Reserve Chair Kevin Warsh, with markets now pricing a higher chance of a US rate rise at the July meeting.

Sterling was steady at $1.320 early on Friday after Andy Burnham won the Makerfield by-election, increasing expectations of a challenge to Prime Minister Keir Starmer’s Labour leadership. The euro was flat at $1.146, the Australian dollar slipped to $0.7011 and the New Zealand dollar held at $0.5752.

Spot gold fell 2.1% early on Friday to $4,122 an ounce, putting it on course for a third weekly decline. Silver dropped 3.9% to $63.25, platinum lost 2.7% to $1,650 and palladium fell 2.3% to $1,250.

Oil prices also fell early on Friday as tankers resumed movements through the Strait of Hormuz after the US-Iran peace agreement. Brent crude slipped to $79.42 a barrel, while US West Texas Intermediate fell to $76.43, with traders watching for firmer evidence that shipping flows are returning to normal.