Brent Eases as Trump Rules Out Iran Strike

Summary

Brent crude eased on Monday after President Donald Trump ruled out an immediate US strike on Iran, pulling back from last week's near six-month high.

The FTSE 100 ended a two-week winning run on Friday while the Dow fell sharply as telecom stocks slumped on SpaceX's wireless plans. Looking ahead, there are countless US earnings reports out this week and Wednesday brings the UK Budget and the Federal Reserve's rate decision.

Equities

The FTSE 100 closed 0.3% lower as Brent crude pushed above $115 a barrel and weighed on risk appetite ahead of Chancellor John Healey's first Budget on Wednesday. The FTSE 250 edged up 0.1% on Friday but still posted its sharpest weekly fall in six weeks.

Rolls-Royce was the heaviest faller, suffering its biggest one-day drop since April 2025 on Friday. The slide followed French rival Safran, which lost 10% after warning that slower aftermarket sales growth could drag on into 2027. Aerospace and defence shares fell to their lowest level in over five months.

Energy was the bright spot, with BP and Shell both climbing on Friday as oil surged. Banks and healthcare stocks dragged on the index, while gold miners fell as bullion slipped.

Domestic data added to the gloom. UK retail sales volumes fell more than expected in September, while consumer confidence posted its steepest monthly fall since the early days of the pandemic.

On Wall Street, the Dow fell 1.23% on Friday, while the S&P 500 lost 0.52% and the Nasdaq slipped 0.21%. Tech shares steadied after Thursday's sharp AI-driven selloff, but most other sectors fell. The Dow still managed a third straight weekly gain, while the S&P 500 and Nasdaq finished the week lower.

Telecoms took the biggest hit. AT&T and T-Mobile both sank sharply and Verizon fell after a report that SpaceX was seeking thousands of cell sites to launch a fourth US wireless carrier. SpaceX shares rose, as did tower operators Crown Castle and American Tower.

American Express fell after announcing plans to cut 5% of its workforce, even as it raised its profit forecast. SLB climbed after beating third-quarter profit estimates, and the energy sector hit a record high as oil rallied.

US stock futures edged higher on Monday morning after President Trump said there would be no strike on Iran on Sunday. You can expect a busy week, with Wednesday's Federal Reserve decision and results from Alphabet, Microsoft and Amazon among roughly a third of S&P 500 companies due to report.

Forex & Commodities

Brent crude eased on Monday, with the December contract slipping to $115.4 a barrel from Friday's settle of $116.7, its highest level since late April. Trading has now rolled to the January contract, which sits around $5 lower at $110.4, so charts tracking the front month show a much steeper drop at Monday's open than the market actually made.

President Donald Trump told reporters on Sunday that "there will not be a strike today" on Iran, while Qatari mediators were in Tehran as part of a US-coordinated push to cool regional tensions. WTI crude fell to $101.6.

Supply worries have not gone away. Houthi attacks on Saudi Arabia drove Brent to a strong weekly gain last week, and US intelligence warnings over Iranian plots targeting Americans have kept a risk premium in the market.

The dollar index was little changed at 101.7 on Monday, as softer oil prices and lower Treasury yields took some heat out of the US currency. The 10-year Treasury yield slipped to 4.967%, close to a one-month low.

Sterling edged up to $1.338 against the dollar on Monday, having touched a 17-month high against the euro on Friday after stronger UK business activity data. Traders are watching Wednesday's Budget for signals on the UK's fiscal path, with a Bank of England rate hike in November already fully priced in

The euro rose to $1.122 on Monday on relief that Moody's spared France a credit downgrade over the weekend, after a week in which French borrowing costs rose the most since late May. The yen was steady at 156.9 per dollar.

Spot gold rose to $4,011 an ounce on Monday as softer oil prices eased inflation concerns. The metal had hit its lowest level since mid-July on Friday, capping its steepest weekly decline since June. Spot silver also firmed, trading at $54.19.

Five major central banks announce decisions this week. The Federal Reserve, the European Central Bank and the Bank of Japan are all expected to hold, while the Bank of Canada and the Reserve Bank of New Zealand are expected to raise rates. Markets put the chance of a Fed hike in December at 77%.