London's FTSE 100 closed 0.39% down on Monday as markets weighed a US-Iran agreement on a 60-day peace framework, with a formal signing scheduled in Switzerland for Friday.
While full details are still uncertain, US President Donald Trump said the agreement would pave the way for the reopening of the Strait of Hormuz and the lifting of the US naval blockade following a formal signing in Switzerland on Friday. Negotiations over Iran's nuclear program are set to continue.
"What can be said with some confidence is that a credible reopening of the Strait of Hormuz would be one of the most important developments for the global economy at this juncture, particularly given that US headline Consumer Price Index (CPI) is above 4% for the first time since 2023, real wages are declining for a second consecutive month, and the [European Central Bank] is still tightening policy into an energy shock, leaving the system with limited capacity to absorb further supply disruption," Rystad Energy said. "In that context, every barrel previously constrained through the Strait represents inflationary pressure that would begin to unwind, at least at the margin."
At home, the UK government proposed banning social media use for children under 16, with the restrictions expected to take effect in spring 2027 if approved by parliament. The ban will include Snapchat, TikTok, YouTube, Instagram, Facebook, and X, but exclude messaging services like WhatsApp and Signal.
In corporate news, telecommunications company Vodafone (VOD.L) dropped 2.81% on the blue-chip index after Deutsche Bank Research reduced its price target to 1.5 pounds sterling from 1.55 pounds, with a buy rating.
"Whilst telco markets remain periodically combative (it was ever thus), VOD is facing fewer major conflicts across its now more focused footprint and we see material reparation from the UK (synergies), EM (strong EUR growth) and balance sheet simplification (associate buy-ins and disposals) which more than mitigate a Germany drag (ahead of an eventual recovery). We reflect new guidance, a delay to the Kenya deal and the purchase of UK minorities (a postponement rather than curtailment of improved returns) and envisage multiple levers for equity appreciation," analysts said.
AstraZeneca's (AZN.L) Alexion unit said the US Food and Drug Administration granted Priority Review to its supplemental biologics license application for Ultomiris, or ravulizumab, for the treatment of adults with immunoglobulin A nephropathy. The drugmaker was down 1.95% at the end of the session.
Looking ahead, investors will focus on the Bank of England's interest rate decision and labor market data on Thursday, following the release of UK inflation figures on Wednesday. Consumer confidence and retail sales data are due on Friday.