European Stocks Turn Positive; Brent Crude Dips Below $110
European stock markets have all turned positive as investors reacted calmly to US President Donald Trump’s deadline for Iran to reopen the Strait of Hormuz.
In London, shares of BP and Shell rose alongside oil prices climbing above $110 per barrel. However, crude prices subsequently retreated, with Brent crude trading 0.3% lower at $109.39 per barrel.
The FTSE 100 index increased by 26 points, or 0.25%, to 10,463. The Dax index in Frankfurt rose 0.7%, the CAC 40 in Paris gained 1.2%, while the FTSE MIB in Milan and the Ibex in Madrid both advanced over 1%.
"While stocks tell their own story, it is striking how far energy markets are from pricing in a dampening down in Middle East tensions," said Dan Coatsworth, head of markets at stockbroker AJ Bell.
"President Trump’s threats of widespread strikes on Iran if the Strait of Hormuz is not reopened by the early hours of tomorrow morning UK time, if taken at face value, create the conditions for a binary set of outcomes. Either there is a climbdown on the part of Washington or Tehran, which could prompt a major rally in equities and easing of energy prices, or a major escalation with all the implications that might have for financial markets. An alternative scenario is that the deadline is extended, and the markets face another uneasy period of trying to gauge the latest mood music in the US and Iran."
The FTSE 100’s precious metals mining sector was under pressure as gold prices declined amid continued US dollar strength and the potential for interest rate hikes, factors that outweighed safe-haven demand during the current crisis.
UK Business Activity Slows Amid Iran Conflict; Service Sector Growth Weakest in 11 Months
The ongoing conflict involving Iran has impacted business activity in the UK, increasing stagflation risks.
The headline seasonally adjusted Purchasing Managers’ Index (PMI) for business activity from S&P Global registered 50.5 in March, down from 53.9 in February and marking the lowest reading since April 2025. This final figure was below the earlier 'flash' estimate of 51.2. Readings above 50 indicate expansion in business activity.
The survey highlighted a significant slowdown in growth across the UK service economy, largely attributed to reduced business and consumer spending amid concerns over the Middle East war's impact.
Profit margins came under pressure as input cost inflation reached its highest level in 11 months, driven by rising prices for fuel, transportation, and raw materials.
Although output levels have increased for 11 consecutive months, the latest expansion was marginal and the weakest in this period.
Many companies reported that the escalating Middle East conflict affected client confidence and investment decisions in March. There was a renewed decline in new work received by UK service sector firms, marking the first downturn in order books since November, with the sharpest contraction in eight months.
Export sales declined, with new business from abroad falling at the fastest rate since last April. Backlogs of work remained broadly unchanged despite reports of international shipping delays and worsening supply chain performance.
Tim Moore, economics director at S&P Global Market Intelligence, said: "UK service providers experienced a marked slowdown in output growth in March as the war in the Middle East encouraged greater risk aversion among clients and postponed investment decisions. Cutbacks to business and consumer spending meant that the rate of business activity expansion was the weakest seen since April 2025. Stagflation risks appear to have increased, with the final Services PMI data signalling slower growth and higher cost pressures than the earlier ‘flash’ estimates based on data compiled up to 20th March. Overall input cost inflation has accelerated sharply since February and was the strongest for 11 months, which was overwhelmingly linked to rising fuel and transportation bills. Many firms also noted that suppliers had sought to pass on higher prices paid for energy, raw materials and shipping. Rising global economic uncertainty due to the war in the Middle East contributed to a further decline in business optimism across the UK service economy. Confidence levels have fallen sharply after hitting a 15-month high in January. Service providers widely commented on fragile domestic economic conditions and concerns about the impact of rising inflation and higher borrowing costs on client demand over the year ahead."
Eurozone Records Slowest Business Activity Growth in Nine Months, Raising Stagflation Concerns
The eurozone economy experienced its slowest growth in business activity in nine months during March, with new orders declining across the service sector and cost pressures increasing.
This development raises the "unwelcome spectre of stagflation," according to a widely followed monthly survey by S&P Global.
The survey revealed that demand in the eurozone worsened for the first time since July. The composite PMI output index, covering manufacturing and services, fell to 50.7 in March from 51.9 in February, indicating a weakening of economic growth.
The headline figure was well below its historical average of 52.4, primarily due to the dominant service sector where activity levels barely rose, although manufacturing output growth remained solid.
At the national level, economic activity trends were mixed. Spain recorded the fastest growth in March with an accelerated upturn, followed by Ireland, where expansion slowed to a six-month low.
Germany, the eurozone’s largest economy, registered the weakest growth so far this year, while France and Italy, the second and third largest economies, experienced contractions in business activity.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "March’s PMI indicates that the eurozone economy has already been hit hard by the war in the Middle East. The encouraging signs of growth seen earlier in the year have been eradicated thanks to surging energy prices, choked supply chains, financial market volatility and a renewed downturn in demand. The accompanying surge in prices raises the unwelcome spectre of stagflation, or worse, in the near-term. The near-stalling of growth in March drags the PMI’s signal for first quarter GDP growth down to 0.2%. More worrying is that there are clear risks of the economy contracting in the second quarter unless there is a swift resolution to the conflict, and even then we will likely see damaging energy market repercussions extending into the coming months."
JPMorgan Receives Approval for New Canary Wharf Tower
JPMorgan Chase has obtained approval to construct a new tower in Canary Wharf, which will be among the tallest in Europe.
The Wall Street bank had been negotiating with officials from nearby London City Airport regarding potential height restrictions. An agreement was reached in February allowing the tower to rise to 265 metres, according to the Financial Times.
This new UK headquarters will surpass One Canada Square, which at 235 metres has been Canary Wharf’s tallest building for over 30 years.
When JPMorgan announced plans in November for a multi-billion-pound tower on its Riverside South site, it withheld details about the building’s height due to pending constraints.
The Docklands financial district is approximately three miles west of London City Airport and lies within its "safeguarding zone," requiring airport consultation on new developments.
The tower will accommodate more than half of JPMorgan’s 23,000 UK employees and is expected to cost £3 billion.
Universal Music Receives Takeover Offer from Bill Ackman’s Pershing Square
American billionaire Bill Ackman’s hedge fund, Pershing Square, has proposed acquiring Universal Music Group (UMG) in a deal valuing the world’s largest music company at over €50 billion (£44 billion).
Pershing Square, based in New York, offered a cash and stock deal to purchase the company, which represents artists including Taylor Swift and Elton John.
Ackman stated that although UMG, led by the British-born CEO, has done "an excellent job nurturing and continuing to build a world-class artist roster and generating strong business performance," its share price has lagged due to issues "unrelated to the performance of its music business."
UMG’s shares, listed in Amsterdam since 2021, have lost more than 25% of their value over the past year.
The company is one of the "big three" record labels alongside Sony Music Entertainment and Warner Music Group, with a roster spanning classical music to stars such as Adele, Drake, and Ariana Grande.
European Stocks Show Mixed Performance
On the stock markets, the FTSE 100 index in London initially rose by 70 points in early trading but later declined nearly 22 points, or 0.2%, to 10,414.
Germany’s Dax slipped 0.2%, while France’s CAC 40 rose 0.45%. Italy’s FTSE MIB and Spain’s Ibex edged up 0.1% and 0.2%, respectively.
Spot gold prices dipped 0.07% to $1,644 an ounce.
Richard Hunter, head of markets at interactive investor, said: "US markets finished on a cautiously positive note after the long weekend, but in the immediate term investors are facing a binary event – ceasefire or further escalation of the conflict. As such, guidance continues in the form of often unconfirmed third party reports detailing progress (or the lack of it) in negotiations. Of little doubt is that the US president’s latest deadline to Iran expires this evening where, in the absence of any agreement from his foes, he has threatened to destroy Iran’s power plants and bridges, causing irreversible damage to the country’s energy infrastructure. The latest reports perhaps suggest a less sinister outcome, with claims that mediators are discussing a 45-day ceasefire, which could conceivably mark an end to the war. Separately it is claimed that such an agreement would be accompanied by an immediate reopening of the Strait of Hormuz. In any event, time is quickly running out as the deadline approaches which in turn will keep investor sentiment brittle and on high alert."
UK Construction Activity Declines Sharply
Construction activity in the UK has fallen significantly as the sector faces challenges from the Middle East conflict and a persistently weak economy, according to a recent survey.
Work starting on site decreased by 17% in the three months to March compared with the previous quarter, and was 18% below levels seen in 2025, based on Glenigan’s latest construction index.
The US-Israel war on Iran, which began at the end of February, shows no signs of abating, creating considerable uncertainty for the construction industry.
Residential construction declined by 13% quarter-on-quarter and was down 30% year-on-year, affected by planning policy uncertainties and economic weakness.
Non-residential project starts fell 15% on the quarter and 5% on the year, although office projects bucked the trend with increases in new starts.
The index includes projects valued at £100 million or less and highlights serious challenges facing the UK construction sector, including a "severely disrupted supply chain and unprecedented market volatility."
"All three main verticals: housing, non-residential buildings and civil engineering are considerably lower than a year ago and on the previous quarter on a seasonally adjusted basis. The sector is fighting on all fronts, home and abroad. Particularly, the Iran war will depress activity further near-term as private developers and house purchasers delay investment decisions due to fears of higher than anticipated interest rates, rising material costs, spiralling energy costs and stalled economic growth. It will have a knock-on effect on the non-residential verticals which, although many have ring-fenced funding, will no doubt be putting activity on hold to ensure they don’t waste budgets whilst rates spike."
Introduction: Oil Surges Above $110 as Trump Sets Deadline for Iran
Oil prices continued to rise on Tuesday, surpassing $110 per barrel amid a deadline imposed by US President Donald Trump for Iran to reopen the Strait of Hormuz or face military action. Trump threatened to order attacks on Iranian power plants and bridges if the strait, a critical shipping route, remained closed.
The deadline was set for Tuesday 8pm Eastern Time (1am BST Wednesday). Tehran rejected a ceasefire proposal mediated by Pakistan, insisting on a permanent end to the conflict.
Brent crude increased 1.1% to $111.01 per barrel, while New York light crude rose 2.6% to $115.3 per barrel.
Asian stock markets were mostly higher, with Japan’s Nikkei up 0.19% and South Korea’s Kospi rising 1.2%, while Hong Kong’s Hang Seng declined 0.7%.
The International Monetary Fund (IMF) warned that the Middle East war will result in higher inflation and slower global growth ahead of its upcoming forecast.
The conflict has caused the worst disruption ever to global energy supplies, with millions of barrels of oil production halted due to Iran’s effective blockade of the Strait of Hormuz, through which one-fifth of the world’s oil and gas normally transit. Even if the conflict ends swiftly, the IMF is expected to lower its economic growth forecast and raise inflation outlook, according to Kristalina Georgieva, IMF managing director.
Kyle Rodda, senior financial market analyst at Capital.com, said: "The markets are back on a Trump-imposed countdown clock. To use a sporting analogy, it’s red time, and the result could go either way. Like a fortnight ago when the first threats from the Trump administration to attack Iranian power plants and other infrastructure were made, the markets are plonked at a crossroad, facing a binary outcome, at least in the short term. Either the attacks happen, marking a possibly catastrophic escalation where regional energy assets and civilian infrastructure across the Gulf is considered fair game. In such an instance, the energy complex jumps, pushing the US Dollar and global yields higher, and equities and non-yielders like gold lower. Or there’s a backdown, even better, a ceasefire, and the markets stage an epic relief rally, where a plunge in oil takes yields and the US Dollar with it, and equities and gold rip. Despite some hopeful headlines yesterday, most of the news paints a grim picture of how things are unfolding roughly 27 hours after Trump’s deadline. President Trump’s rhetoric is hawkish and increasingly unhinged and the Iranians remain obstinate, with reports suggesting both sides remain worlds apart on the terms of a ceasefire, especially as it pertains to the Strait of Hormuz. Neither would benefit from an escalation."
New car sales in the UK increased by approximately 6% in March, traditionally the largest month for vehicle registrations, according to preliminary industry data.
Sales of battery electric vehicles reached a record high, the Society of Motor Manufacturers and Traders reported. However, their market share of 23% remains below the government’s target of 33% for this year.
The industry has called for an urgent review of the UK’s electric vehicle transition, citing surging gas prices driven by the Middle East conflict that have increased electricity costs.
Upcoming Economic Data Releases
- 8:45am-9am BST: Italy, France, Germany, eurozone S&P Global PMIs (final) for March
- 9am BST: UK new car sales for March
- 9:30am BST: UK S&P Global PMI for March
- 1:30pm BST: US durable goods orders for February
