Brent Climbs as Trump Rejects Iran's Hormuz Proposal

Summary

Brent climbed after President Trump rejected Iran's latest proposal to reopen the Strait of Hormuz, extending its run above $100 to three weeks and leaving it up 17% for September. Diesel hit record highs amid a refining shortage. European share futures firmed while Wall Street futures eased, gold fell and the dollar was flat. US 2-year yields have jumped 55 basis points this month as markets price a likely Fed hike in October.

Equities

The FTSE 100 closed 0.14% higher at 10,695.25 on Friday, marking a second consecutive weekly gain. The FTSE 250 rose 0.44%, while banks and precious metal miners offset declines in energy stocks as oil prices eased.

Barclays gained 1.6% on Friday, while Lloyds Banking Group rose about 1.7% and Standard Chartered added 2.5%. Precious metal miners rose 2% as gold and silver prices recovered after sharp falls earlier in the week.

BP fell 2.3% on Friday after Reuters reported that the oil company was considering a potential acquisition of Devon Energy's operations in South Texas. HSBC upgraded BP to "buy" from "hold". Shell fell 0.8% as oil prices declined amid hopes for a US-Iran truce and concerns over supply disruptions linked to attacks on Saudi Arabia.

Capricorn Energy rose 13.9% on Friday after Genel Energy increased its cash offer for the company to $436 million, topping a rival bid from DNO. Harworth Group gained 5.1% after Goodweather Holdings raised its final offer for the property regeneration company to 187 pence per share.

In the US, the S&P 500 closed 0.51% higher at 7,743.41 points on Friday, while the Nasdaq gained 0.48% to 27,068.72 and the Dow Jones Industrial Average rose 0.93% to 51,828.62. The S&P 500 gained 1.2% over the week and the Nasdaq rose 2%.

Microsoft jumped 3.7% on Friday after unveiling new Copilot capabilities, including a coding tool and an always-on AI agent. Qualcomm gained 4% and Dell rose 5%, while Akamai Technologies climbed 3.2% following an $11.6 billion cloud services deal with Anthropic.

Meta Platforms fell 3.3% on Friday after rising about 13% over the week. People Inc jumped 11% after a report that MGM Resorts International was discussing a bid for the magazine publisher.

Forex & Commodities

The US dollar was up early on Monday, remaining close to a two-month high as US-Iran tensions pushed oil prices higher and Treasury yields continued to rise. The euro was down at $1.139, close to a two-month low and on course for a 2% September decline. Sterling was steady at $1.325, near a three-month low after Bank of England Governor Andrew Bailey repeated his warning that higher energy prices could make it harder to keep interest rates on hold.

The yen was down late in Asian trading at 157.7 per dollar after Japan's Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent reaffirmed plans to strengthen cooperation over yen weakness. Japanese service-sector inflation also rose at its fastest annual pace in more than two years in August, adding to the case for faster Bank of Japan rate increases.

Spot gold was down 2.1% early on Monday at $4,198 an ounce, its sharpest daily decline since September 1. Higher oil prices and bond yields strengthened expectations of further Federal Reserve rate increases, with markets pricing a 68% chance of an October hike.

Brent crude was up 3.29% early on Monday at $107.75 a barrel, while US West Texas Intermediate was up 2.32% at $94.55. Prices rose after US President Donald Trump rejected an Iranian peace proposal aimed at resolving the conflict and reopening the Strait of Hormuz, although he said US negotiators were expected to hold further talks this week.