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Thanks for following our coverage of financial markets today.
Before we go, a quick update on the latest. US stocks rebounded from a sharp sell-off on Friday caused by better than expected jobs data, which led to fears the Federal Reserve will lift interest rates.
The uncertainty surrounding the conflict in the Middle East also hit markets amid concerns about higher oil prices and the impacts on inflation.
Meanwhile, Asian stocks suffered sharp falls as traders led a major sell-off on the back of the tour in US technology stocks last week.
US stocks rebound after last week’s sell-off
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US stocks were up on Monday in a rebound from a sharp sell-off on Wall Street last week.
The S&P 500 was up 0.8pc by the middle of Monday’s session, while the tech heavy Nasdaq 100 index was up by almost 2.2pc.
The Dow Jones Industrial Average was up by 0.2pc too.
It marked a rebound from a sharp slump on Friday sparked by better-than-expected jobs data which led to fears of higher interest rates.
FTSE 100 finishes Monday unchanged
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Britain’s FTSE 100 index finished Monday’s session almost entirely unchanged following a day of volatile trading for the index.
Energy and defence stocks helped lift the FTSE 100 index and offset sharp fall in housebuilders’ stocks, as markets worldwide were hit by fears surrounding the conflict in the Middle East.
It saw the UK’s main stock index end Monday’s session up by 0.1pc
The index was lifted by a 0.75pc increase in BP’s stock price as oil prices surged on the renewed outbreak of fighting between Israel and Iran. BAE Systems’ share price also finished Monday up by 1pc.
Meanwhile, housebuilders Berkeley Group, Persimmon, and Barratt Redrow all fell by more than 2pc amid concerns about soaring costs and sluggish demand.
US airline fuel costs increase by 78pc
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US airlines saw their fuel costs increase by 78pc in April, to nearly $6.5bn (£4.9bn), due to the conflict Middle East, according to new data from the U.S. Transportation Department.
The cost of a gallon of jet fuel rose to $4.11 in April, compared to just $2.31 in April last year, putting mounting pressure on airlines who have lifted ticket prices in response.
It has seen fares for flights with a US origin rise by as much as 31pc for domestic trips and 22pc for international ones, when compared to the same weeks in 2025, according to search data from KAYAK.
Meanwhile, Spirit Airlines, the ultra low-cost airline, ceased operations in May, citing the “sustained rise in fuel prices in recent weeks”.
The International Air Transport Association, which represents over 370 airlines, expects fuel bill to surge to about $350 billion this year from roughly $252 billion in 2025.
Chip stocks jump after AI sell-off
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Shares in semiconductor companies climbed on Wall Street in a rebound from a heavy sell-off at the end of last week.
Micron jumped 8.3pc and Nvidia rose 1.6pc, while Broadcom shares added 3.2pc.
Adam Sarhan of 50 Park Investments believes that “the market overreacted on Friday” with a tech sector sell-off after Broadcom delivered a forecast that disappointed investores.
The Nasdaq fell 4.2pc on Friday as it was also hit by solid US jobs data that fueled fears that the Federal Reserve would raise interest rates later this year.
Mr Sarhan said: “Now we have cooler heads prevail, and buyers are showing up and buying the latest dip.”
He added that investors also want to believe that “we’re making progress with the Middle East” after Iran said it was ending its latest military operation targeting Israel.
Wall Street surges as Iran halts strikes
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US stocks surged at the opening bell after Iran said it would end its strikes against Israel.
The tech-heavy Nasdaq leapt 1.5pc to 26,098.10, recovering some of the losses suffered during a 4.2pc drop on Friday.
The S&P 500 rose 1pc to 7,454.22 while the Dow Jones Industrial Average climbed 0.7pc to 51,230.77.
US tech giant to invest £2bn in Britain to build AI supercomputers
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An American semiconductor giant has unveiled plans to invest £2bn in Britain to build new AI supercomputers.
Advanced Micro Devices (AMD), a rival to Nvidia, said on Monday it would invest in a string of UK-based programmes in the next five years, including a project to build a supercomputer aimed at nuclear fusion.
The US-listed business makes the graphics chips driving the world’s AI boom and is worth £570bn.
Lisa Su, the chief executive of AMD, said the company planned to “expand access to the compute infrastructure needed to advance sovereign AI” in Britain.
Reeves speaks at London Tech Week
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The Chancellor delivered a speech at London Tech Week hours after Sir Keir Starmer used his address to announce that children will be blocked from taking, sharing or viewing nude images on their phones.
You can watch Rachel Reeves’s appearance here:
Gas prices ease as Iran declares end of strikes
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European wholesale gas prices have retreated after Iran said it would stop its strikes against Israel.
Dutch TTF, the Continent’s benchmark, was up 2.7pc, having earlier surged by as much as 6.2pc.
Meanwhile, stock markets were mixed as after the apparent easing of tensions in the Middle East.
The FTSE 100 was up 0.1pc but the Cac 40 in France and Dax in Germany were down 0.1pc and 0.3pc, respectively.
Iran declares end of strikes on Israel
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Iran has declared that its military strikes against Israel have ended, the country’s media has reported.
Oil prices remained up 1.4pc at around $94 a barrel, following the report by the Fars news agency, but this was well down from earlier gains of more than 5pc to nearly $98.
Iran’s central military command signalled it would retaliate if Israel resumed strikes on Lebanon.
US stocks poised to rise after AI rout
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US stock indexes rose in premarket trading as chip companies steadied after plunging at the end of last week.
Shares of Nvidia, Broadcom and Micron Technology rose between 1.5pc and 3.9pc ahead of the opening bell on Wall Street, rebounding from a sharp sell-off on Friday that wiped out $1 trillion in market value.
The S&P 500 and Nasdaq were on track to open higher after brushing end to last week, kicked off by underwhelming results from Broadcom.
Losses were exacerbated when traders bet that the Federal Reserve will raise interest rates to combat the risk of higher inflation fgrom the Iran war.
Mark Haefele, chief investment officer at UBS Global Wealth Management, said: “We do not expect investors to lose confidence in the AI outlook.
“Although tech stocks have come under pressure in recent days amid concerns about whether expectations can be met, business fundamentals remain strong.”
The S&P 500 was up 0.4pc in premarket trading, while the Nasdaq 100 rose by 0.7pc. The Dow Jones Industrial Average was down 0.1pc.
Trump: Israel and Iran looking at ‘immediate ceasefire’
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Donald Trump said Israel and Iran were in final negotiations on a peace deal after both sides launched missile strikes overnight.
He wrote on Truth Social: “Final negotiations on “Peace” are proceeding, subject to ignorance or stupidity getting in its way.”
Brent crude oil remains more than 4pc higher on the day at more than $97 a barrel.
Borrowing costs rise over inflation fears
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The cost of government borrowing rose around the world over concerns that renewed tensions in the Middle East will fuel an inflation shock.
Bond yields, a proxy for what countries pay to borrow money in financial markets, jumped after Israel and Iran exchanged strikes over the weekend.
The yield on 10-year gilts, as UK bonds are known, rose from 4.9pc to 4.94pc over fears the Strait of Hormuz will not reopen soon, risking fresh surges in the cost of oil and gas.
Bond yields have also been pushed higher by official data on Friday showing the US jobs market was stronger than expected last month, which has increased bets on the Federal Reserve raising interest rates.
The yield on 10-year US treasuries has climbed from 4.53pc to 4.56pc.
‘This is just a nightmare and needs to end’
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Britons face spiralling mortgage rates and cost of living pressures the longer the Middle East conflict drags on, Telegraph readers have warned.
Here are some of the views from the comments section below, and you can join the debate here.
Rates on hold as Iran war continues, says Bank of England official
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Alan Taylor, a policymaker at the Bank of England, said borrowing costs are likely to remain on hold as the Iran war continues.
He added that interest rates, which are currently at 3.75pc, are restrictive for the economy and he did not see the need for an increase to tackle inflationary pressures.
In an interview with Sky News, Mr Taylor said: “I feel comfortable where we are unless we get the worst-case scenario.
“But I really want to get that sense that this is moving behind us.”
Before the conflict broke out in the Middle East, Mr Taylor was one of the strongest advocates for rate cuts on the Bank’s nine-member Monetary Policy Committee.
Since the Iran war began, Bank officials have voted to hold borrowing costs.
China and Hong Kong stocks tumble
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China and Hong Kong stocks ended at their lowest levels in two months in a global tech sell-off.
China’s blue-chip CSI300 Index hit its lowest level since April 15. The Shanghai Composite Index touched its lowest since April 8.
In Hong Kong, the benchmark Hang Seng Index dropped 1.2pc to its lowest since late March.
Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management, said: “From a short-term perspective, there’s a bubble in China’s AI stocks.
“But from a long-term horizon, the market is still healthy.”
The Shanghai Composite Index has retraced all of its year-to-date gains, having risen more than 7pc at its peak.
European stocks fall as Israel and Iran renew air strikes
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European stock markets fell as tensions increased in the Middle East.
The Continent-wide Stoxx 600 index fell 0.7pc, with all major indexes also in the red, after Israel and Iran have renewed air strikes on one another.
The Cac 40 in Paris was down 0.8pc and the Dax in Frankfurt declined by 1pc as oil prices rose. Europe largely relies on imported energy.
Energy price-sensitive airlines were hit, with Lufthansa and Air France down 1.9pc and 2.4pc, respectively.
Tech stocks were also among the biggest fallers after sharp losses in the US and Asia.
Infineon slipped 1.7pc and BE Semiconductor lost 3.8pc. AI equipment makers Legrand and Schneider Electric fell about 2pc each.
Houthis ‘ban’ Israel in Red Sea
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Oil prices have risen further after the Iran-backed Houthis said they would ban Israeli maritime navigation in the Red Sea.
The Yemen-based group also said that they had attacked Israel and would target “all enemy movements”.
They have decided to impose a “complete and total ban on maritime navigation for the Israeli enemy in the Red Sea”.
Brent crude was last up 5.1pc on the day to nearly $98 a barrel.
The Red Sea has become a key relief point for oil exports carried via a pipeline through Saudi Arabia after the effective closure of shipping through the Strait of Hormuz.
Pound falls as traders bet on higher US interest rates
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The pound dropped to a three-week low against the dollar as investors bet that the Federal Reserve will raise interest rates this year.
Sterling edged down to $1.333, which was its lowest since May 18, after money markets priced in that the Fed would raise rates from 3.5pc-3.75pc to 3.75pc-4pc by December.
Jonas Goltermann, chief markets economist at Capital Economics, expects the Fed to raise rates twice this year, a quarter of a percentage point each time, in response to the inflation shock caused by the Iran war.
He said: “The US payrolls report ... paints a picture of a US labour market that is strengthening despite the ongoing energy price shock.
“That combination makes policy tightening by the Fed later this year increasingly probable ... we now expect the FOMC to deliver two 25 basis-point rate hikes later this year, in response to the energy supply shock and the re-acceleration of the US labour market.”
The pound was also down 0.1pc versus the euro at €1.157.
Markets ‘turn ugly’ as oil spikes and stocks tumble
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Mohit Kumar, chief Europe economist at Jefferies, said markets “turned ugly” after stronger-than-expected US employment figures on Friday.
The American economy added 172,000 jobs in May, which was double the 88,000 expected by analysts, while unemployment remained at 4.3pc.
This increased bets on the Federal Reserve raising interest rates later this year, which would tighten financial conditions just as the tech sector braces for the giant listings of SpaceX and AI chatbot maker Anthropic.
Mr Kumar said investment bank Jefferies remains “cautious on the market” as Kevin Warsh takes over as the new chairman of the Fed, America’s central bank.
He said: “A resilient employment picture, combined with an oil price led inflationary shock would put pressure on the Fed to hike rates.
“Any hawkish comments from Warsh next week, would not be well received when the market is already concerned with AI valuation and mega IPOs.”
Nvidia announces AI deals as Korean stocks suffer sell-off
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Korean stock markets have been in turmoil but that has not stopped Nvidia announcing a raft of artificial intelligence deals.
The world’s most valuable company unveiled with SK Telecom a “gigawatt-scale” AI data centre construction project, with the first facility set to come online in 2027.
It will support “AI services for enterprises and industries across Korea, with the vision to expand to greater Asia regions”, the companies said.
No figure was given for how much the pair will invest in the data centres, or for other new tie-ups that Nvidia touted with the likes of Naver, LG Group, Hyundai and Doosan Group, including on AI robotics.
The deals were unveiled after Nvidia chief executive Jensen Huang spent the weekend eating barbecue and fried chicken with the country’s tech leaders in Seoul and appearing on a popular TV show.
Nvidia also said it would work with chipmaker SK Hynix to develop advanced memory components that are needed to run AI systems but are currently in short supply.
UK stocks slump after fresh strikes in Middle East
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The FTSE 100 dropped at the open after the latest missile attacks in Israel and Iran.
The UK’s flagship stock index was down 0.3pc to 10,333.08 while the mid-cap FTSE 250 fell 0.7pc to 22,899.20.
Korean stocks hammered by AI sell-off
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Trading was briefly halted overnight in South Korea after its flagship market was swept up in another dramatic tech sell-off.
The Kospi stock index dived more than 8pc to lead a rout across Asia as tech firms were hammered by bets on a Federal Reserve interest rate hike.
News that Iran and Israel had struck each other sparked worries about an escalation of the Middle East crisis, adding to the gloomy mood on trading floors and sending oil prices surging by around 5pc.
The technology sector bore the brunt of losses as investors cashed out following a breathtaking surge in recent months, which has been powered by a race into all things linked to artificial intelligence.
The selling came after US employment figures on Friday showed more than double the amount of US jobs than expected were created in May, while those in the previous two months were revised higher.
Analysts said that showed the world’s top economy remained resilient in the face of surging prices, but ramped up bets on the Fed raising interest rates.
Yields on US Treasury bonds rose as investors anticipated higher rates, while the dollar strengthened against its main rivals.
All three main indexes on Wall Street tumbled Friday, led by a 4.2pc drop in the Nasdaq.
That heavy selling extended into Asia, where tech-rich markets felt the most pain.
The Kospi – which has hit multiple record highs this year – tanked as much as 8.8pc at one point as chipmaker Samsung shed as much as 11.7pc and rival SK Hynix lost as much as 10.5pc.
Taiwan sank as much as 6pc and Japan fell as much as 4.8pc.
Oil jumps 5pc as strikes threaten to derail peace talks
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Oil prices have jumped by as much as 5pc after fresh strikes in the Middle East threaten to derail progress in peace talks.
Brent crude, the international benchmark, climbed as high as $97.77 a barrel overnight, up from $93.09 when trading closed on Friday.
The sharp rise in oil prices came after Iran launched a series of ballistic missiles at Israel on Sunday night.
The attack marked the first time that Iran has targeted the country since its ceasefire with Israel and the US was brought into effect in early April. It came after Israel bombarded the southern outskirts of Beirut in targeted strikes on Sunday evening.
Oil prices had fallen as low as $93 a barrel last week on hopes that a stable ceasefire between Iran, the US and Israel could be agreed.
However, the latest barrage of missiles in the Gulf has cast doubt on whether an agreement can be reached and caused concerns that the Strait of Hormuz will remain closed.
The crucial waterway, which has been effectively blockaded since the end of February, transports around 20pc of the world’s oil and gas.
Oil prices have risen as high as $126 a barrel during the conflict amid escalating strikes and concerns about energy supplies.
Since the start of the conflict there have been volatile swings in the oil price as traders react to the latest developments in the Gulf.
Good morning
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Thanks for joining me. The price of oil spiked after Israel said it struck military targets in Iran.
Brent crude, the international benchmark, was up as much as 5pc overnight to nearly $98 a barrel after the fresh assault raised doubts about a deal to reopen the Strait of Hormuz.
A fifth of the world’s oil and gas exports usually pass through the waterway along the Iranian coast, which has been largely closed for more than three months since the start of the Middle East conflict.
Stephen Innes of SPI Asset Management said: “Every exchange of fire adds another layer to the geopolitical risk premium embedded in crude.
“Every military response forces traders to widen the range of possible outcomes.”
The spike in oil prices added pressure to stock markets already grappling with a tech sell-off over concerns that an AI bubble could pop.
Korea’s chip-heavy Kospi, the world’s best-performing market this year, led losses in Asia with a 5pc slide. It has fallen 13pc from last week’s record high.
Japan’s Nikkei fell almost 4pc with market darlings across the computer-chip production supply chain falling furthest, while Taiwan’s benchmark sank 3.9pc.
European stocks were also on track to fall around 1pc at the open, in the first day of trading since a 4.2pc drop on Wall Street’s Nasdaq. Here is what you need to know.
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What happened overnight
Oil prices jumped after Israel and Iran fired at each other in the most serious escalation since a ceasefire began two months ago.
Brent crude rose 4.7pc to $97.48 after the fresh assaults threatened to plunge the Middle East back into war.
Iran launched a barrage of ballistic missiles at Israel on Sunday night causing fresh uncertainty across the Middle East. The latest assault came after Israel bombarded the southern outskirts of Beirut in targeted strikes.
In the US stock futures fell over worries that the war would escalate further.
Stocks plunged in Asia amid the turmoil, while investors also dumped some of the hottest AI-linked shares over fears they have risen too far, too fast.
In Hong Kong, the Hang Seng fell 1.8pc to 24,521.32, Japan’s Nikkei declined 4.4pc to 63,692.78 and the Korean Kospi slid 8.2pc to 7,490.04.
Trading was closed in Australia for the King’s Birthday, a holiday.