British stocks recovered from earlier losses on Monday as rising oil prices lifted major energy companies.
However, the ongoing confrontation between the United States and Iran continued to limit investor risk appetite. With Wall Street closed for the Labor Day holiday, lower trading volumes also increased the risk of sharper market swings.
FTSE 100 Recovers as Energy Stocks Rise
The FTSE 100 reversed earlier losses and was up 0.27% as of 09:25 ET, or 13:25 GMT.
Elsewhere in Europe, Germany’s DAX remained under pressure and fell 0.28%. France’s CAC 40, meanwhile, moved into positive territory with a gain of 0.35%.
Sterling also strengthened, with GBP/USD rising 0.167% to 1.3537.
Energy companies were among the strongest performers in London. BP climbed 2.02%, while Shell gained 1.76% as crude oil prices continued to rise.
Strait of Hormuz Traffic Falls
Oil markets remained focused on developments around the Strait of Hormuz.
Data from analytics firm Kpler showed that traffic through the key shipping route fell to its lowest level since May.
An average of just 10 vessels per day passed through the strait. That was down from a 10-day average of 13 ships on Saturday and more than 15 on Friday.
Only two vessels reportedly crossed the route on Saturday, followed by six on Sunday.
The decline has increased concerns about possible disruptions to global oil and gas supplies.
Iran Plans Maritime Exclusion Zone
Iranian officials added to the uncertainty surrounding the Strait of Hormuz.
Mohsen Rezaei, head of Iran’s Supreme National Security Council, said Tehran planned to announce a maritime exclusion zone outside the strait.
The proposed zone would extend from the line of the US naval blockade through Hormuz and into the Persian Gulf.
At the same time, Iran’s foreign ministry said negotiations with Oman over a temporary safe-passage arrangement were in their final stage.
Officials said the agreement could be registered with the International Maritime Organization within the coming days.
Qatar also warned that Gulf countries could not depend solely on the United States for regional security.
Jaguar Land Rover Announces Major Job Cuts
Domestic economic concerns also weighed on sentiment in the UK.
Jaguar Land Rover announced plans to cut nearly 4,000 jobs, representing close to 10% of its global workforce.
The reductions are expected to take place through voluntary redundancies over a two-year period.
The Tata-owned carmaker is targeting £1.7 billion in savings while aiming to reduce its break-even point toward annual production of 300,000 vehicles.
JLR cited intense competition and continued geopolitical uncertainty as key factors behind the restructuring.
UK Government Pushes Growth Measures
The announcement came shortly after Chancellor John Healey delivered a speech focused on economic growth.
The government pledged to reduce business regulation by 25% by the end of Parliament.
It also announced a £150 million British Business Bank fund aimed at supporting scale-up companies in northern England.
Business Secretary Jonathan Reynolds later spoke with JLR CEO PB Balaji. Further discussions involving unions are expected during the week.
Bond Markets Raise Fiscal Concerns
Investors are also watching growing pressure in government bond markets.
UBS economist Dean Turner warned that recent bond-market weakness shows investors are increasingly focusing on fiscal sustainability.
He argued that markets are shifting their attention away from short-term monetary policy and toward longer-term government finances.
This change could become increasingly important for the UK if borrowing costs remain elevated.
US CPI and ECB Decision in Focus
Jefferies strategist Mohit Kumar highlighted several important catalysts for markets this week.
These include upcoming US consumer inflation data, Wednesday’s European Central Bank decision and continued geopolitical risk in the Gulf.
Markets are also assessing expectations for future Federal Reserve policy following stronger-than-expected US payroll data.
According to Kumar, the probability of a September Fed rate increase was close to 60%.
UK House Prices Fall Year-on-Year
Fresh housing data added another challenge for the British economy.
Figures from Lloyds showed UK house prices fell 0.4% year-on-year in August.
That marked the first annual decline since November 2023 and came below economists’ expectations for a 0.2% increase.
Prices also dropped 0.2% from the previous month. Analysts had expected a 0.1% rise.
Oil Prices Continue Higher
Energy markets remained one of the main drivers of the FTSE 100 session.
Brent crude rose 1.07% to $97.31 per barrel, while WTI crude increased 0.92% to $92.32.
Gold moved in the opposite direction.
December gold futures fell 0.78% to $4,441.89, while spot gold declined 0.75% to $4,396.92.
UK Corporate Roundup
Several UK-listed companies also attracted investor attention.
TotalEnergies moved its Papua LNG project closer to a final investment decision after reducing expected capital spending to around $14 billion.
The company achieved the reduction through contract rebidding and design optimisation. It also finalised an amended gas agreement with Papua New Guinea and established an LNG marketing joint venture with Kumul Petroleum.
IQE reported an adjusted first-half core profit of £6 million.
The improvement was supported by strong demand from AI infrastructure, data-centre and defence customers.
The company said positive momentum continued into the second half and maintained its full-year outlook.
Gamma Communications was also in focus after reports that Waterland planned to submit a higher takeover offer than Epiris’ £1.08 billion bid.
Gamma had previously agreed to an offer of 1,120 pence per share from Epiris.
Finally, Standard Life reported stronger-than-expected first-half profit.
The results were supported by new business growth and continued demand for pension risk-transfer products as defined-benefit pension schemes seek to transfer liabilities to insurers.
For the FTSE 100, energy stocks remain a major source of support. However, developments in the Strait of Hormuz, oil prices, central-bank policy and UK economic data could continue to drive volatility in the sessions ahead.
