Markets Slump as Trump Iran Ceasefire Nears End

The FTSE 100 remained flat on Tuesday as markets braced for the expiry of a temporary ceasefire in the U.S.-Iran conflict, with investors monitoring diplomatic efforts in Pakistan amid renewed threats from President Donald Trump to target Iranian infrastructure if negotiations fail.

The two-week suspension of hostilities, announced by Trump in early April, is set to end on Wednesday, creating uncertainty over oil supplies and global financial stability. Trading in Asia showed signs of pressure on Monday following the failure of initial peace talks to produce an agreement, according to reports from the region.

Vice President JD Vance led the first round of U.S. Negotiations in Islamabad, which concluded after 21 hours without resolution. Vance stated that the United States “could not get to a situation where the Iranians were willing to accept our terms,” while Iran’s foreign ministry countered that Washington had made “excessive demands and unlawful requests” during the discussions.

Despite the stalemate, Trump has maintained that a deal could be reached “relatively quickly” and denied external pressure to accelerate negotiations. In a post on Truth Social, he rejected claims of urgency, stating: “THIS IS NOT TRUE!” in response to speculation about mounting pressure to secure an agreement.

Oil prices have remained elevated throughout the ceasefire period due to ongoing fears of supply disruption, particularly in the Strait of Hormuz, a critical chokepoint for global crude shipments. Market analysts have warned that any collapse in talks could trigger renewed volatility in energy markets and broader economic repercussions.

Separately, the UK is set to release its latest unemployment figures on Tuesday morning, with forecasts suggesting joblessness could peak at 5.8 percent as the labor market faces what officials describe as the “biggest hit” since the pandemic. The data comes amid growing concern over the broader economic impact of sustained geopolitical tensions.

Among other business developments, Revolut’s anticipated initial public offering has been delayed, with founder Nik Storonsky indicating the listing is now approximately two years away. M&C Saatchi reported declining profits, citing warnings related to the Iran war and a softer UK market as contributing factors.

Chancellor Rachel Reeves is scheduled to meet with executives from Lloyds Banking Group and NatWest later this week to discuss the financial sector’s exposure to the ongoing conflict, highlighting increasing government engagement with major banks on systemic risks tied to the Middle East situation.

Inflation pressures linked to the conflict continue to influence consumer costs, with projections indicating upward pressure on airfares, fuel prices, and rental costs due to sustained disruption in global supply chains and energy markets.

In retail investment trends, semi-liquid vehicles — including money market funds and short-term investment products — are projected to surpass $3 trillion in assets as more individual investors enter the market, reflecting a shift toward accessible, low-volatility instruments amid economic uncertainty.