London stocks clawed back losses on Monday as the FTSE 100 closed 0.3% higher, reversing an early retreat driven by renewed Iran sanctions and a sharp selloff in technology shares.
The blue-chip index was weighed by energy majors and tech-linked names before a late rebound lifted it off session lows. Brent crude fell 1.5% to $91.32 per barrel, easing pressure on oil-sensitive groups, while WTI declined 1.8% to $85.52. Gold futures rose 0.7% to $4,713, reflecting safe-haven demand amid lingering geopolitical risks.
The British pound dipped 0.1% against the dollar to 1.3633, while broader European benchmarks showed mixed performance. Germany’s DAX slipped 0.1% and France’s CAC 40 fell 0.4%, as investors awaited key corporate and policy signals later in the week.
Iran’s Supreme National Security Council Secretary Mohsen Rezaei warned that Tehran could disrupt oil flows through the Strait of Hormuz in response to U.S.-led sanctions, calling any such action an "act of war" against countries backing the measures. U.S. Treasury Secretary Scott Bessent described the sanctions campaign as "the single greatest financial offensive ever marshalled against an adversary," framing it as an "economic D-Day" in comments to the Financial Times.
Meanwhile, Iran’s foreign ministry spokesman Esmaeil Baghaei stated that "any escalation" would bring "consequences" and accused the U.S. of mistakenly believing military force could force Iran to capitulate. House Speaker Mike Johnson told Fox News that the U.S. was entering a "new phase" in its conflict with Iran, asserting that Republicans could retain their House majority even if the confrontation extended into the midterm elections.
Analysts cautioned that sanctions alone may struggle to alter the standoff without broader international support. Mohit Kumar of Jefferies noted that China and Russia’s alignment would be critical, adding that such measures often take too long to yield tangible effects. UBS economist Maelle Quillevere highlighted that UK economic data had continued to surprise to the upside, with labour market conditions loosening without a sharp deterioration in employment.
Investors are also focused on Nvidia’s earnings report due on Wednesday and a speech by Federal Reserve Governor Kevin Warsh at the Jackson Hole symposium later in the week. Shell’s planned sale of U.S. chemical assets, which could fetch up to $8 billion, has drawn interest from ExxonMobil, LyondellBasell, Apollo and Kuwait Petroleum, according to a Financial Times report published Monday.
