FTSE 100 on track for best month since first US attacks on Iran five months ago – business live

FTSE 100's Unexpected Ascent

London's benchmark FTSE 100 index has demonstrated remarkable resilience, poised to record its best monthly performance since February, despite a backdrop of significant geopolitical instability and domestic economic challenges. The index reached a new record high of 10,989.45 earlier in the day, and is on track to finish July up by nearly 4%, recovering substantially from a 6.7% drop in March following US-Israeli attacks on Iran. This rebound suggests a degree of investor confidence or perhaps a 'buy the dip' mentality, allowing the market to shrug off immediate negative headlines.

This strong performance contrasts sharply with the turmoil of March, when the index dipped below 9,700 points. The current upward trajectory, even with a slight dip towards the end of the trading day, indicates a robust underlying sentiment among investors in London's biggest companies. This resilience is particularly noteworthy given the broader economic pressures, such as rising inflation and the ongoing impact of the Iran conflict on global energy prices.

Corporate Restructuring and Economic Headwinds

While the FTSE 100 soared, several major UK companies revealed significant struggles and strategic shifts. Morrisons, the supermarket giant, reported widened losses of £926 million and announced 5,000 job cuts, grappling with heavy debts and intense competition in the retail sector. Similarly, Sainsbury's is divesting its Argos retail chain for £120 million, a decade after its £1 billion acquisition, to refocus on its core food business. These moves underscore the challenging operating environment for traditional retailers.

Adding to the economic pressures, UK petrol prices have hit their highest level this year, reaching around £1.60 per litre, primarily driven by the Iran war pushing up fuel costs. This directly impacts household budgets and corporate expenses, as evidenced by British Airways owner's profits falling due to increased fuel costs. Even the housing market, typically buoyant in July, saw dampened growth as prospective buyers remained cautious about interest rates amidst the conflict.

Global Market Divergence and Geopolitical Shadows

The global market landscape presented a mixed picture. While Wall Street's major indices, including the S&P 500, Nasdaq, and Dow Jones, also showed gains at the opening bell, driven partly by strong tech earnings like Amazon's 11% jump, other tech giants faced headwinds. Apple's share price, for instance, was down 8% pre-market due to supply chain problems impacting its forecasts. In Asia, Korea's stock market notably rose a record 18%, indicating regional specific dynamics.

BP's decision to sell its North Sea oil and gas business after six decades of production signals a strategic shift for the energy giant, potentially influenced by long-term energy transition goals or current market conditions. The persistent shadow of the Iran war continues to be a significant factor, not only in fuel prices but also in broader economic uncertainty, influencing consumer confidence and investment decisions across various sectors globally.