FTSE 100 Live: Stocks jump as Trump hails ‘great progress’ on Iran; oil dips

Good morning and welcome back to the City AM liveblog.

Donald Trump has hailed “great progress” towards a “final agreement” with Iran, prompting a rally in the FTSE, Asian markets and Wall Street.

In a sudden reversal late last night, President Trump said he will pause “Project Freedom” to pursue a deal.

Trump had been poised to use the US navy to “guide” stranded ships through the Strait of Hormuz, but the President said last night this effort will be paused for a “short period”.

Oil prices are in retreat, as benchmark Brent crude prices fell by nearly two per cent to $107.7 per barrel.

Back in the UK, retail and hospitality giants are starting to feel the long-feared costs caused by the Iran war. JD Wetherspoon said it has seen a “substantial increase” in costs, while retail titan Next said it will take a £47m hit but pledged not to hike prices further.

Thursday’s local elections are threatening to send shock waves through the market, as Keir Starmer’s position as Prime Minister teeters in the balance.

Gilt yields hit a 28-year high on Wednesday, as investors weighed up the prospect of a new Prime Minister, as Ed Miliband, Angela Rayner and Andy Burnham circle to Starmer’s left.

This shaky market sentiment comes as investors weigh up the loose approach to fiscal discipline that any one of these figures are likely to bring to Downing Street.

Fears of rising inflation are also prompting the gilt markets to shudder, as the Bank of England’s unconvincing rates hold last week failed to preclude the potential of several rate hikes later this year.

In further signs that Reeves’ regime of fiscal “stability” is under threat, City AM revealed this morning that the Treasury watchdog’s own estimates – dating back to 2024 – suggest the Chancellor is set for a borrowing spree to keep a lid on inflation.

We’ll be bringing you the latest as it unfolds.

Here’s a few of our top stories this morning

• ‘Clear risk signal’: Gilt yields hit 28-year high as investors weigh Starmer’s future
• KPMG faces staff uproar as job cuts expose communication breakdown
• OBR calculations suggest Reeves set for borrowing spree
• ‘Political choice’: Retailers urge government to act on rising costs
• A bank tax hangs in the balance at the local election ballot