London close: Stocks hit three-week high as oil price drops

16th Jun 2026 16:33

(Sharecast News) - UK stocks hit a three-week high on Tuesday, as a sinking oil price softened the outlook for inflation on a busy week for central bank meetings.

"The FTSE 100 bounced as peace hopes pushed oil lower and lifted risk appetite, with banks, aerospace, defence and selected growth names leading," said Patrick Munnelly, partner of market strategy at Tickmill Group.

"But gains were capped by uncertainty over the US-Iran agreement, the first FOMC under the new Fed Chair and the looming BoE vote split. This is a relief rally, not an all-clear: lower oil helps, but central banks still own the next move."

The FTSE 100 was 0.6% higher at 10,494.21, finishing at its highest level since 27 May.

Oil prices continued to fall on the back of the weekend peace deal struck between Washington and Tehran, though uncertainty surrounding the deal still remains with many details still unknown.

Brent crude was down 4.4% at $79.55 a barrel by the close of play in London, on track to settle at its lowest level since the first week of March when the conflict first began.

Speaking to CNN on Tuesday, US Vice President JD Vance said the memorandum of understanding between the US and Iran is expected to be formally signed in Geneva later this week. He said the agreement was a general, one-and-a-half-page document, with further details still to be negotiated and conceded that a number of issues remain.

"On a number of issues, we are going to have to figure this stuff out during the technical negotiation phase, but what the MOU does is set up a framework whereby the Iranians get the benefits of the bargain by meeting their obligations under the bargain," he told CNN.

Central banks take centre stage

Central banks were once again in focus last week, with key decisions in the US and UK still ahead. The first Federal Reserve policy meeting under new chief Kevin Warsh on Wednesday is expected to result in no change, while the Bank of England decision on Thursday is likely to be a split vote - though the consensus is a hold.

Overnight, the Bank of Japan lifted its policy rate from 0.75% to 1% - the highest level since 1995 - as widely expected, while the Reserve Bank of Australia held interest rates at 4.35% but warned that it was prepared to tighten monetary policy again if inflation persisted.

Meanwhile, the chief economist of the ECB - which last week became the first central bank to hike rates since the outbreak of the Iran war - said that further rate increases were possible if the incoming data supports the decision. "Whether we do more or stay at the new level will be dependent on incoming data," he said.

Speaking on Tuesday, Philip Lane acknowledged that energy prices have fallen since the monetary policy announcement, owing to the "welcome" peace deal between the US and Iran agreed in the past few days, but pointed out that oil prices were still higher than before the conflict began.

Flutter up, AB Foods down

Flutter Entertainment was the top gainer on the index after Wedbush initiated coverage of the stock at 'outperform', arguing that recent share losses are cyclical and should reverse. The broker said the current valuation does not adequately factor in upside opportunity from the company's prediction market offering or the likelihood of a second-half rebound in relative US performance.

AB Foods fell despite the Competition and Markets Authority clearing its £75m acquisition of Hovis. The competition watchdog found that if the merger did not go ahead, the most likely outcome would be that AB Foods would exit the market entirely in Great Britain and Northern Ireland.

Engine maker Rolls-Royce was among the best performers, closely followed by defence firms BAE Systems and Babcock, after falling sharply the previous session. BAE was in focus after securing a $535m contract with the US Army.

Scottish Mortgage Investment Trust, which has a significant holding in SpaceX, was also on the front foot, as the frenzy around the US aerospace and AI company's blockbuster IPO on Wall Street continues.

On the FTSE 250, SDCL Efficiency Income Trust plummeted after recommending shareholders to vote in favour of a proposed wind-down, while choosing not to declare a fourth interim dividend for the last fiscal year.

Rathbones shares were also sliding after it said a skilled person review following engagement with the Financial Conduct Authority had identified areas for improvement in its UK Wealth Management business, including the implementation and embedding of Consumer Duty and aspects of compliance, oversight and assurance.

Market Movers

FTSE 100 (UKX) 10,494.21 0.61%

FTSE 250 (MCX) 23,326.58 -0.15%

techMARK (TASX) 5,903.69 -0.04%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 1,393.00p 3.06%

Scottish Mortgage Inv Trust (SMT) 1,486.00p 2.48%

Persimmon (PSN) 1,078.50p 2.47%

Convatec Group (CTEC) 209.00p 2.45%

NATWEST GROUP (NWG) 628.60p 2.24%

BAE Systems (BA.) 1,860.50p 2.20%

Fresnillo (FRES) 3,264.00p 2.00%

Games Workshop Group (GAW) 20,340.00p 1.95%

HSBC Holdings (HSBA) 1,409.60p 1.81%

Flutter Entertainment (DI) (FLTR) 8,120.00p 1.81%

FTSE 100 - Fallers

BT Group (BT.A) 197.05p -2.69%

Marks & Spencer Group (MKS) 372.20p -1.77%

Associated British Foods (ABF) 1,894.00p -1.69%

Antofagasta (ANTO) 4,231.00p -1.38%

Relx plc (REL) 2,420.00p -1.31%

Vodafone Group (VOD) 111.55p -1.28%

Smurfit Westrock (DI) (SWR) 3,314.00p -0.96%

Admiral Group (ADM) 3,442.00p -0.86%

SSE (SSE) 2,358.00p -0.76%

Sainsbury (J) (SBRY) 309.50p -0.74%

FTSE 250 - Risers

Currys (CURY) 155.70p 3.66%

Partners Group Private Equity Limited. (EUR) (PEY) 8.62p 3.61%

Edinburgh Worldwide Inv Trust (EWI) 288.50p 3.22%

Baillie Gifford US Growth Trust (USA) 341.00p 3.02%

Vistry Group (VTY) 230.80p 2.85%

Endeavour Mining (EDV) 4,223.00p 2.85%

Grafton Group Ut (CDI) (GFTU) 901.20p 2.69%

AO World (AO.) 96.00p 2.35%

Lancashire Holdings Limited (LRE) 635.50p 2.33%

Marshalls (MSLH) 140.40p 2.33%

FTSE 250 - Fallers

SDCL Efficiency Income Trust (SEIT) 34.50p -25.00%

Rathbones Group (RAT) 1,620.00p -17.01%

Aston Martin Lagonda Global Holdings (AML) 40.80p -4.40%

Frasers Group (FRAS) 720.00p -4.38%

WH Smith (SMWH) 421.00p -3.75%

Ceres Power Holdings (CWR) 576.50p -3.43%

Raspberry PI Holdings (RPI) 842.50p -3.38%

Pagegroup (PAGE) 121.90p -3.33%

RTW Biotech Opportunities Ltd (RTW) 2.18p -3.11%

Foresight Environmental Infrastructure Limited (FGEN) 83.00p -2.81%