Signing off...
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Thanks for following our coverage of financial markets today as the US and Iran tentatively agreed a deal to bring the conflict in the Middle East to an end.
Before we go, a quick update on the latest. Stocks on Wall Street have soared as investors welcomed comments from Donald Trump that the Strait of Hormuz would be reopened to ships on Friday.
Oil prices fell to a three month low on hopes energy supplies would begin flowing through the crucial waterway. Brent crude, the international benchmark, fell by 5pc to around $83 a barrel.
Stay up to date with the latest here.
Britain’s £1bn tank delayed by gearbox flaws
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The British Army is battling delays to a new fleet of tanks designed to outgun Vladimir Putin’s forces, dealing a setback to Sir Keir Starmer’s rearmament plans.
Project leaders working on the £1bn Challenger 3 upgrade programme are understood to be grappling with engineering problems caused by a weak gearbox, throwing into doubt plans for the vehicles to enter service next year.
Sources told The Telegraph that suppliers have been told to halt work temporarily while the issues are fixed.
The revelation is yet another headache for the Ministry of Defence (MoD) just days after John Healey’s shock resignation as defence secretary.
US oil reserves fall to 43 year low
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Oil reserves in the United States have fallen to 340m barrels, the lowest level since 1983, according the latest official statistics.
The decline comes as the US sought to ease rising fuel prices and avoid energy shortages because of the closure of the Strait of Hormuz.
Around on fifth of the world’s oil reserves flow through the crucial waterway.
Figures released on Monday show that Donald Trump’s administration has almost completed its plan to release 172m barrels of oil from emergency reserves. The move means oil reserves in the US have dropped to their lowest level since 1983.
It comes Trump has attempted to use the nation’s emergency supplies to prevent energy prices in the US from spiralling out of control.
Dow Jones climbs to intra-day high
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The Dow Jones Industrial Average climbed to an intra-day record high on Monday following the agreement between the US and Iran.
The index rose as much as 1.4pc to 51,911.33 at lunchtime in New York. The S&P 500 added 1.9pc.
Shares in airline compares soared higher as investors welcomed the reports of a preliminary agreement to reopen the Strait of Hormuz. United Airlines gained 5.4pc, American Airlines added 4.4pc, and Delta Airlines climbed 2.2pc.
The tech-focused Nasdaq Composite gained 3pc. It was boosted by SpaceX, Elon Musk’s rocket company, which had risen by 9.6pc in its second day of trading.
FTSE 100 closes lower following US-Iran deal
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The FTSE 100 ended the day lower after the US-Iran deal caused a sharp fall in London-listed energy giants.
Shares in Shell fell 4.4pc, while BP declined 3.3pc as oil prices dropped to a three month low following reports that the US and Iran had reached an agreement to reopen the Strait of Hormuz.
However, the more domestically-focused FTSE 250 added 36.91 points, or 0.2pc, to 23,362.62.
Bank of England should raise rates this week to show it is serious
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In a Reuters poll of 65 economists, every single one expected the Bank of England’s Monetary Policy Committee (MPC) to keep UK interest rates unchanged this Thursday. But I could forgive the MPC for springing a surprise.
For a start, the global monetary policy cycle has already turned. The fallout from the crisis in the Middle East has added to cost pressures worldwide, with average inflation in the OECD economies hitting 4.4pc in April.
The Reserve Bank of Australia (RBA) has raised rates twice this year. Closer to home, the European Central Bank (ECB) increased rates in the euro area by a quarter point last week. The Bank of Japan looks poised to follow suit.
Energy disruption will take time to resolve, warns IMF chief
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Energy disruption caused by the closure of the Strait of Hormuz will take time to resolve following the ceasefire agreement between the US and Iran, Kristalina Georgieva, the head of the International Monetary Fund (IMF), has said.
In a statement on the IMF’s website Ms Georgieva warned: “As we have said before, much depends on the duration and intensity of the energy supply shock.
“The sooner it is resolved, the better – especially as supply will take time to recover given the significant infrastructure damage – and Sunday’s ceasefire announcement is welcome.”
Ms Georgieva added that there is “a clear risk to global growth” because of the conflict in the Middle East.
Her comments come as several countries, including Ethiopia and Malawi, have been grappling with fuel shortages caused by the blockade of the Strait of Hormuz.
Bank of England “highly unlikely” to increase interest rates
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Policymakers at the Bank of England are expected to leave interest rates unchanged when they meet on Thursday, according to ING.
James Smith, developed markets economist at ING, said: “A rate hike at this Thursday’s Bank of England decision had already become highly unlikely.
“And thereafter, the US-Iran deal has nudged the pendulum back towards a prolonged pause.”
Markets currently expect the central bank to increase borrowing costs just once this year.
The Bank of England’s nine-member Monetary Policy Committee will meet on Thursday to decide if they should change borrowing costs.
At the last meeting in April they voted to hold interest rates at 3.75pc.
Oil market to ‘avoid damaging shortages’
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Oil prices will fall to around $78 a barrel in a year’s time after the US-Iran deal, a Swiss private bank has said.
Lombard Odier said it expects around half of the usual flow of oil shipping will return over the coming weeks, which would be “enough to avoid further damaging shortages”.
Brent crude would average around $90 a barrel in the six months from the start of the conflict, it said, falling to $78 in its 12-month forecast.
Chief economist Samy Chaar said: “Indeed, shipping activity in the Strait had already increased in recent weeks and some supply offsets have helped to contain oil prices.
“China has lowered its oil imports by more than five million barrels per day, easing pressure on global balances, while Saudi Arabia and the United Arab Emirates continue to operate pipelines to bypass the Strait.
“Additional logistical options will become available as confidence improves.”
He added: “While several key questions remain unresolved, a partial recovery of energy and shipping flows through the Strait should be enough to avoid damaging shortages for the global economy.”
SpaceX fuels rocketing AI shares
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It was not just lower oil prices boosting US stock markets.
AI companies also jumped on the second day of trading for SpaceX.
Elon Musk’s rocket company also owns AI company xAI and was last up 7.2pc on its second day of trading at $172.
It means investors who got hold of shares during its initial public offering (IPO) have already made gains of more than 27pc, with the company now worth nearly $2.3trn (£1.7trn).
Chip stocks were also higher, with Micron up 8.2pc, AMD up 8.1pc and Nvidia climbing of 1.9pc. The latter was the strongest force pushing the S&P 500 upward because it is Wall Street’s most valuable company, giving it more weight on the index than any other.
Vance expects Iran will not charge tolls on Hormuz
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JD Vance said that the US expects Iran will not charge tolls on shipping through the Strait of Hormuz after the breakthrough announced overnight.
The US vice president said the issue would be discussed as part of the new peace deal.
Mediator Pakistan announced on Sunday that the United States and Iran had agreed to an “immediate and permanent termination” of military operations, but the text of their peace deal has yet to be released.
Iran’s foreign ministry meanwhile said on Monday that the deal would allow it to charge maritime service fees on ships transiting the Strait of Hormuz, rather than imposing tolls.
The deal is expected to be signed on Friday in Switzerland and be followed by further “technical” talks on a long-term agreement.
Donald Trump said that with the signing, the Strait of Hormuz would be reopened and a US naval blockade of Iran would be lifted.
Asked on CNBC if there was an understanding with Iran that the strait would reopen toll-free for just an initial period of 60 days or indefinitely, Mr Vance said: “Our expectation is that the strait is going to be opened in a toll-free way for the long term, and that’s the sort of thing that we’re going to figure out in these technical negotiations.”
Vance did not give specifics on the terms of the relief Monday, but emphasized that it was “built around a two-step verification process.”
“We say to the Iranians, you are welcome to have access to an unsanctioned economy, you’re welcome to be re-invited into the world economy, but only if you honour the commitments that you make in this agreement.”
Wall Street surges at the open
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US stock markets leapt at the opening bell as Wall Street reacted for the first time to the deal agreed between the US and Iran setting out a path to end the Middle East conflict.
The Dow Jones Industrial Average rose 1.2pc to 51,827.40 while the S&P 500 climbed 1.5pc to 7,540.80.
The tech-heavy Nasdaq Composite surged by 2.4pc to 26,502.31.
Mortgage rates cut after US-Iran agreement
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Nationwide has cut some of its mortgage rates after Donald Trump announced an agreement setting out the path to end the war with Iran.
The lender said it would shave up to 0.28 percentage points off first-time buyer, home mover and remortgage deals.
Head of mortgage products Carlo Pileggi said: “We’re delighted to be cutting rates again as we look to put Nationwide at the forefront of borrowers’ minds.
“These changes will support first-time buyers and home movers, as well as provide competitive options for those looking to remortgage.”
World braces for flood of oil
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Oil prices could plunge to levels last seen before the Iran war after shipping traffic resumes from the Strait of Hormuz, an analyst said.
Jordan Rochester, executive director at Mizuho Bank, said the global economy should expect a “front-loaded oil flood” as hundreds of vessels stranded in the Gulf hit the market at the same time.
He added oil prices could also fall as around 15pc of global oil production restarts.
He said: “We will note that a lot of this is already in the price so it’s likely to be a grind not a full throttle collapse in prices.
“Our best guess is a range of $70-85 per barrel for Brent during the 60-day negotiation period, with a real risk of a test of sub-war levels due to a potential short term oversupply of tankers leaving the Gulf.”
Brent crude was last down 4.9pc to $83 a barrel, while US-produced West Texas Intermediate was down 5.4pc to $80.
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In today’s To Business newsletter, Christopher Williams argued that the decision by the Trump administration to ban foreign use of the latest artificial intelligence models released by Anthropic heralds the arrival of AI nationalism and reveals Britain’s essential dependence on the benevolence of senior nations.
Might it now always be possible for the tenant of the White House to switch off systems that may end up baked into our military, our critical utilities and the City?
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Dollar to suffer ‘big move’ lower after deal
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The dollar will suffer a “big move” lower as a result of the US-Iran deal to end the war.
Robin Brooks, a fellow at The Brookings Institution, said the war in Iran had been a source of strength for the currency as traders dumped riskier assets and sought out the safe-haven US currency.
He also believes the dollar will fall as the Federal Reserve is able to cut interest rates later this year.
“I’ve been emphasizing for some time that there’s no indication of overheating in any of the inflation data,” he said.
“An end to the war and markets going back to pricing Fed cuts is worth a five percent drop in the dollar. We’ll get there soon enough.”
The pound was last up 0.1pc against the dollar to $1.342.
We've had many false starts at this deal. The one constant across all of them is that the Dollar fell sharply whenever there were rumors of a deal. That's now the big move that will happen. Not oil prices lower but instead a fall in the Dollar versus EM...https://t.co/Ntw4FaInXz pic.twitter.com/aewQqDvohr
— Robin Brooks (@robin_j_brooks) June 15, 2026
Oil prices lower despite Iran deal to charge toll for Hormuz
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Oil prices remained around 5pc lower despite reports that Iran will charge fees for vessels passing through the Strait of Hormuz.
Tehran said it would guarantee free passage through the waterway for 60 days and after that period, vessels will be required to pay tolls to cover security, navigation, environmental and insurance services.
Iran and Oman will be recognised as sole authorities over the crucial waterway, Iran’s Fars news agency reported, in what appears to be a concession by Donald Trump to get the memorandum of understanding over the line.
Emmanuel Macron, the French president, said any reopening of Hormuz must be done without tolls.
Brent crude was last down 4.8pc to $83 a barrel.
So now there's an Iranian toll on Hormuz. What began as American humiliation this morning has become an outright American defeat.
— Jake Wallis Simons (@JakeWSimons) June 15, 2026
And the worst of it is that the regime played Trump by inserting the demand at the last moment.
The real losers of this are the most vulnerable: the…
Get ur Hormuz pass! Iran says 60 days toll free 😂
— Amena Bakr (@Amena__Bakr) June 15, 2026
FTSE 100 held back by falling oil prices
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The FTSE 100 rose at a much slower pace than European rivals as its oil giants were hit by the US-Iran agreement.
The UK’s blue-chip stock index was up 0.1pc as Shell and BP tumbled by 4.8pc and 3.8pc, respectively, making them the worst performers on Monday.
Precious metal miners led the way with a 6.9pc jump, tracking gains in gold and silver prices. Fresnillo and Antofagasta climbed 7.6pc and 6.2pc, respectively. Hochschild was the best performer on the FTSE 250, up 10.3pc.
Homebuilders rose 2.2pc over hopes for lower interest rates. Barratt Redrow and Persimmon were both up 2.2pc.
Elsewhere, Frasers Group declined 2.1pc after the sporting goods retailer launched a buyout offer for Australia’s Accent Group.
Gold and bitcoin rally over hopes for end to war
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Bitcoin and gold have surged since the US-Iran deal was announced in a sign that confidence is returning to markets.
The world’s largest cryptocurrency was up as much as 3.2pc to nearly $66,000 while bullion has climbed as much as 3.1pc to $4,345 an ounce.
Stephen Coltman of 21shares, a provider of crypto investment funds, said: “We have a rally in riskier assets and gold is up, and that gives people the confidence to buy bitcoin.
“Gold is interesting because its demand has been from institutions and China. But we have seen selling by central banks in the Iran war to defend their currencies.
“Countries have not been generating the same oil revenue and so have needed to sell some gold to defend their currencies, and so bitcoin has performed better.”
Mortgage borrowers ‘breathe a sigh of relief’
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Mortgage borrowers will “breathe a sigh of relief” after the US-Iran agreement, which is expected to bring down interest rates.
The average two-year fixed deal was down from 5.62pc to 5.61pc on Monday, while the typical five-year deal dropped from 5.59pc to 5.58pc, according to Moneyfacts.
Swap rates, which are used to price mortgages, have dropped sharply since Donald Trump announced a deal would be signed on Friday. Two-year sonias, as they are known, fell from 4.12pc to as low as 4.04pc, while the five-year rate fell from 4.16pc to 4.1pc.
Adam French, head of consumer finance at Moneyfactscompare.co.uk, said: “Mortgage borrowers will breathe a sigh of relief at the news of a peace deal in Iran.
“While we are far from being out of the woods yet, a lasting peace deal should dramatically reduce the risk of the Bank of England’s worst-case scenario for inflation and interest rates becoming a reality.
“Under that scenario, Base Rate could have risen to 5.25pc, potentially pushing typical rates on new mortgages towards 6.75pc.
“Instead, today’s news means mortgages rates, which have already been slowly falling for several weeks, have likely already passed their peak – at least until the next unwelcome crisis.
“Borrowers can be optimistic but with a word of caution, as inflation and economic data will continue to influence the outlook.
“However, a lasting peace should remove one of the biggest risks to mortgage costs and may help restore a more stable environment for hard-pressed remortgage borrowers and prospective buyers.”
US stocks poised to surge
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Wall Street’s main indexes jumped in premarket trading after Washington and Tehran reached a preliminary agreement to end the Iran war and reopen the crucial Strait of Hormuz.
Oil prices tumbled to their lowest level since April after the two sides said a pact would be formally signed in Switzerland on Friday.
Airlines were boosted by the news, with United Airlines up 4.4pc. Delta Airlines added 4pc and American Airlines gained 3.5pc, while holiday groups Norwegian Cruise and Carnival added 4.3pc and 3.6pc, respectively.
Chip stocks moved higher in premarket trading as the falling oil price meant traders scaled back bets on higher interest rates.
Micron soared 8.2pc after multiple brokerages raised its price target, while Nvidia was up 2.3pc, Intel added 3.1pc and Marvell Technology rose 5.4pc.
Ahead of the opening bell, the Dow Jones Industrial Average was up 0.8pc, the S&P 500 rose 1.2pc and the tech heavy Nasdaq 100 was up 2pc.
Iran war costs drivers £4bn
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The Iran oil crisis has cost UK drivers £4 billion through higher fuel prices, according to new analysis.
The RAC Foundation estimated that rises in pump prices since the conflict in the Middle East began on February 28 have led to motorists paying £3bn more for diesel and just over £1bn more for petrol.
The figures are based on average daily pump price rises and last year’s fuel consumption rate.
The analysis also shows that the additional VAT received by the Treasury because fuel is more expensive has reached almost £670m.
VAT on road fuel is charged at 20pc on top of the combined price of the product and fuel duty, with the latter standing at nearly 53p per litre.
Sir Keir Starmer announced last month that a planned rise in fuel duty from September 1 has been scrapped until at least the end of the year.
Iran’s restrictions on tankers passing through the Strait of Hormuz led to oil prices hitting their highest level since 2022.
The average price of a litre of petrol at UK forecourts is about 24p more expensive than before the war began, with the cost of a litre of diesel about 36p higher.
Makerfield by-election ‘looming’ over bond markets
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Analysts fear the rally in UK bond markets could be put at risk by the Makerfield by-election this week, in which Andy Burnham is the bookies’ favourite for victory.
Mr Burnham is expected to mount a leadership challenge against Sir Keir Starmer if he emerges victorious on Thursday.
He has triggered spikes in government borrowing costs over the last year after saying politicians were too “in hock” to the bond markets. He has since committed to maintaining Rachel Reeves’s fiscal rules if he were to lead a future government.
Timothy Emmott, an analyst at Cavendish, warned of “political events looming later this week”, which he said risks derailing the drop in bond yields – a proxy for the cost of government borrowing.
Bank of England’s next move is rate cut, says bank
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The Bank of England’s next move will be a cut to interest rates, an investment bank has said after the deal between the US and Iran.
Jefferies said a drop in oil below $80 a barrel would “remove any reason” for the Bank or the US Federal Reserve to raise rates.
Mohit Kumar, chief Europe economist, said: “From the market perspective, a deal is a clear positive and is reflected in the futures prices and the Asia equity markets.
“We should see some rotation into the growth positive sectors, which are more sensitive to oil prices.”
However, he also sounded a note of caution.
He added: “Details of the deal are not yet clear and the agreement would be published after the deal is signed. Key details which are missing include whether the passage through the Strait would be free and the timeline over which sanctions would be lifted and funds unfrozen for Iran. The status over Israel and Hezbollah is also not clear.
Do we think that we will have an agreement which would solve Middle East problems? No. But what the market cares about is whether the Strait of Hormuz will be open and oil can start moving towards pre-war levels.”
Borrowing costs hit two-month low after US-Iran deal
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The cost of government borrowing fell sharply after the US and Iran announced they would sign an agreement in Switzerland setting out the terms for ending the Middle East war.
The yield on 10-year gilts, a benchmark for what the Treasury pays to borrow money in financial markets, declined from 4.84pc to as low as 4.77pc as the agreement sent oil prices falling.
Lower crude prices ease inflationary pressures on the economy, which means there is less impetus for the Bank of England to raise interest rates.
The yield on two-year gilts, which is more sensitive to interest rates, dropped from 4.23pc to as low as 4.15pc.
Lower inflation also makes government bonds more attractive, as inflation erodes their returns.
European stocks surge as US-Iran deal announced
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European stocks surged after a tentative deal was announced on ending the Iran war and reopening the Strait of Hormuz.
The Dax in Germany leapt 1.8pc while the Cac 40 in France rose 1.7pc after Iran confirmed the initial agreement announced by Donald Trump that authorised an end to the US naval blockade of Iranian ports.
Broader negotiations on issues like Iran’s nuclear program are expected to continue over the next 60 days.
The FTSE 100 was last up 0.7pc.
China calls for reopening of Hormuz as soon as possible
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China welcomed the agreement reached between the United States and Iran to end their conflict, a spokesman said at a regular press briefing.
Beijing hopes the deal will be signed as planned, the spokesman said, adding China hopes that safe and free passage through the Strait of Hormuz will be restored as soon as possible.
Traders scale back bets on rate rises
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Traders have reduced their bets on the Bank of England raising interest rates this year following the deal between the US and Iran.
Money markets are only pricing in one rate rise from 3.75pc to 4pc, with early trading pushing back the timing to as late as December.
Derivatives trades had indicated there would be two rises as recently as Thursday. Rates are expected to remain on hold when the next decision is announced on Thursday.
Jim Reid, an analyst at Deutsche Bank, said attention would be “focused on the vote split and any evolution in guidance against a backdrop of still-sticky inflation”.
More votes for rate rises on Monetary Policy Committee would increase bets on higher borrowing costs, as would changes to the Bank’s language around inflation.
FTSE 100 leaps at the open
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The FTSE 100 jumped as the week’s trading began following the announcement of a US-Iran agreement aimed at reopening the Strait of Hormuz.
The UK’s flagship stock index rose by 0.8pc to 10,551.84 while the mid-cap FTSE 250 surged by 1.2pc to 23,614.99.
Pound rises after US-Iran deal
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The value of the pound rose against the dollar after the preliminary agreement to end the US-Iran war.
Sterling rose 0.3pc to $1.344 as the American currency dropped against major peers amid hopes that the Strait of Hormuz can be reopened.
The dollar is considered a safe-haven in times of turmoil but Mr Trump sent crude prices plunging as he declared “let the oil flow” after the memorandum of understanding was announced.
Nick Twidale, an analyst at ATFX Global, said: “I think we’ll see the dollar fall over the course of the next few sessions.
“We’ll probably see some of the risk currencies like Aussie and yen appreciate a little bit. But I don’t think we’re going to see any huge moves.
“There’s going to be a lot of wait and see, on how quickly the strait really reopens and how long it’s going to take for oil flows to really get back to normal. It’s certainly going to be months rather than weeks.”
The pound was down 0.1pc against the euro at €1.158.
Good morning
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Thanks for joining me. The Bank of England is “more likely” to cut interest rates this year after the US and Iran announced a deal paving the way for an end to the war.
Traders have reduced bets on the Bank raising rates after a memorandum of understanding was finalised overnight, sending oil prices falling.
Brent crude fell more than 4pc to $83 a barrel on Monday, its lowest level since March.
Stephen Innes of SPI Asset Management said: “Oil down takes the inflation impulse down.”
The Bank of England is expected to keep rates at 3.75pc when it announces its next decision on Thursday, but bets on rate rises have now fallen.
Laura Lambie, senior investment director at FTSE 250 asset manager Rathbones, told BBC Radio 4’s Today programme: “I think short term it’s not going to have any impact at all.
“I do think, though, that cuts are more likely over time and we may well, if we’re lucky, see a rate cut by the end of the year because that hinges on the expectations for inflation and obviously the rise in oil price have really pushed up inflation expectations.
“So any de-escalation of that is going to be good news for inflation.” Here is what you need to know.
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What happened overnight
Stock markets rallied hard in Asia and oil prices tumbled after a tentative peace deal was agreed between the United States and Iran.
European stock markets were up in premarket trading, with Germany’s Dax up 1.6pc and Britain’s FTSE 100 up 0.8pc.
Donald Trump said the agreement included opening the vital Strait of Hormuz, although no details have yet been revealed.
He wrote on Truth Social: “Ships of the World, start your engines. Let the oil flow!”
Pakistani Prime Minister Shehbaz Sharif said on social media early on Monday that an Iranian peace deal had been struck.
Mr Trump will meet with Middle Eastern leaders and attend a working session with Ukrainian President Volodymyr Zelenskiy during a G7 summit in France this week.
The news will be a relief for the crowd of central banks meeting this week, easing some of the pressure to tighten policy to head off an energy-driven rise in inflationary expectations.
Markets had already priced in a likely deal but the confirmation was enough to send Brent crude falling 4.7pc to $83 a barrel, well away from its May peak of $126.
The prospect of cheaper oil will be a boon to Japan which is a net importer of energy. Its Nikkei stock index climbed 5pc.
South Korea’s red-hot Kospi market jumped 5pc, and Chnia’s CSI 300 rose 1.9pc. The Hang Seng in Hong Kong gained 0.5pc.