Key insights
- European stocks closed mixed with the FTSE 100 edging lower as markets weighed conflicting signals regarding a potential US-Iran ceasefire extension and nuclear talks. Uncertainty over the unsigned memorandum of understanding, coupled with Iran's stance on enriched uranium and the Strait of Hormuz, introduces geopolitical risk. This ambiguity could lead to increased volatility and cautious investor sentiment globally, potentially impacting risk appetite for US equities.
Investing.com -- British stocks closed lower on Friday, reversing initial gains, while broader European markets were mixed as investors balanced cautious optimism over a possible U.S.-Iran ceasefire extension against the prospect of another weekend of geopolitical uncertainty and a memorandum of understanding that remains unsigned and contested.
The FTSE 100 closed 0.2% lower, while Germany’s DAX rose 0.1% and France’s CAC 40 fell 0.1%. Sterling climbed 0.2% against the dollar to $1.3467.
The session’s tone was set by conflicting signals on a possible 60-day ceasefire extension. U.S. sources told the White House press pool Thursday that a tentative memorandum of understanding had been reached that would extend the ceasefire, reopen the Strait of Hormuz and open formal nuclear talks, but that U.S. President Donald Trump had not yet given final approval.
Vice President JD Vance told reporters, "We’re not there yet, but we’re very close, and we’re going to keep on working at it."
Iran’s IRGC-affiliated Tasnim News Agency pushed back directly, citing a source close to the negotiating team who said the MOU text "has neither been finalized nor confirmed," had changed several times in recent days, and that any Western narrative claiming otherwise was "incorrect." Tehran said it would notify Pakistani mediators and the public only once a text was completed.
The talks face structural obstacles on both core issues. The head of Iran’s parliament National Security Committee said Tehran’s enriched uranium stockpile would not leave the country and that Iran was pursuing permanent management of the Strait of Hormuz as long-term policy.
A hardline cleric warned Iranian diplomats Friday against "shaking hands and smiling" with Washington, while an Iranian foreign policy official described Hormuz as "a new strategic source of leverage" and said China could serve as guarantor of any possible deal.
Military tensions continued alongside diplomacy. CENTCOM confirmed Iran launched a ballistic missile toward Kuwait on Wednesday in what it called an "egregious ceasefire violation," successfully intercepted by Kuwaiti forces.
Iran’s state broadcaster separately reported 24 ships had crossed the Strait in the past 24 hours under IRGC coordination, though said traffic had "not yet returned to pre-war conditions" and that vessels from hostile countries remained barred.
Secretary of State Rubio met Pakistani Foreign Minister Ishaq Dar in Washington Friday morning, with Islamabad serving as key mediator, while Under Secretary Allison Hooker separately met Oman’s ambassador. Trump called Qatar’s Emir Thursday, praising Doha’s support for Pakistani mediation efforts.
Treasury Secretary Bessent announced fresh sanctions on firms allegedly facilitating Iranian military oil exports, saying 111 vessels had been redirected and Iranian crude pushed to record lows.
Adding a domestic layer to the London session, Bank of England Governor Andrew Bailey said the BOE could tolerate inflation temporarily above its 2% target to support the UK’s weak economy, so long as second-round effects do not emerge.
Markets have sharply pared rate-hike bets through May, with swaps now pricing just one quarter-point increase by year-end versus three expected as recently as late April, with the June 18 meeting now a key test.
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