Source: Sharecast
The FTSE 100 closed 0.3% higher at 10,529.39. Meanwhile, Brent crude was up 2.5% at $85.34 a barrel and West Texas Intermediate was 1.8% higher at $79.58, off earlier highs after Trump backed down on his plans for a Hormuz toll.
Stocks had spent most of the day in the red on the back of Trump’s initial announcement about a toll, but sentiment shifted after data from the Bureau of Labour Statistics showed the annual rate of US consumer inflation slowed substantially in June as increases in gasoline prices eased following last month's ceasefire deal between the US and Iran.
The headline year-on-year change in the consumer price index fell to 3.5% last month from the three-year high of 4.2% in May.
This was the lowest since the onset of the Iran war in March and well below the 3.8% reading expected by economists.
The primary reason for the slowdown was the annual increase in energy costs easing to 15.7% from 23.5% in May as crude prices came back down from a four-year high after a temporary truce was agreed between Washington and Tehran as negotiations began.
The drop in oil resulted in gasoline price inflation falling to 26.7% year-on-year from 40.5% in May, while energy prices were broadly steady month-on-month.
Nevertheless, even when excluding more volatile energy and food prices, core inflation slowed more than expected to 2.6% in June from 2.9% in May, below the 2.8% consensus forecast.
Also helping to lift the mood were blockbuster quarterly results from US banking giants JPMorgan, Bank of America, Goldman Sachs, Citigroup and Wells Fargo, who kicked off earnings season in style.
Patrick Munnelly at Tickmill Group said: "Early trading was dominated by concerns over rising US-Iran tensions, higher oil prices and the risk that renewed energy pressure could keep central banks hawkish. But the tone improved once the US inflation print came in below expectations, easing rate-hike anxiety stateside and helping global equities stabilise."
In equity markets, BP gained as the oil giant confirmed that higher commodity prices were set to boost second-quarter earnings, despite a fall in upstream production.
Genus surged as the animal genetics company said it expects annual earnings to be moderately above expectations after a strong second half in Asia and Latin America that more than offset weaker conditions in North America.
Rank Group advanced it hailed "strong" full-year underlying operating profit, ahead of expectations.
Pearson was knocked lower by a downgrade to ‘neutral’ from ‘overweight’ at JPMorgan. The bank said its forecasts and price target now only imply modest upside and it sees better value elsewhere.
Market Movers
FTSE 100 (UKX) 10,529.39 0.30%
FTSE 250 (MCX) 23,406.83 0.04%
techMARK (TASX) 5,905.65 -0.74%
FTSE 100 - Risers
Airtel Africa (AAF) 349.20p 3.37%
Centrica (CNA) 177.30p 3.20%
Rio Tinto (RIO) 6,955.00p 3.14%
Glencore (GLEN) 530.20p 2.81%
BP (BP.) 516.50p 2.75%
Anglo American (AAL) 3,670.00p 2.40%
IMI (IMI) 2,862.00p 2.21%
HSBC Holdings (HSBA) 1,490.00p 2.12%
Metlen Energy & Metals (MTLN) 41.42p 1.97%
Barclays (BARC) 519.90p 1.94%
FTSE 100 - Fallers
Flutter Entertainment (DI) (FLTR) 8,032.00p -7.66%
Pearson (PSON) 1,229.00p -6.75%
InterContinental Hotels Group (IHG) 157.50p -3.61%
Smith & Nephew (SN.) 1,114.00p -3.51%
Barratt Redrow (BTRW) 278.20p -2.39%
3i Group (III) 2,641.00p -2.00%
Convatec Group (CTEC) 210.60p -1.96%
AstraZeneca (AZN) 12,364.00p -1.95%
Diageo (DGE) 1,517.50p -1.91%
Compass Group 11 (CPG) 31.70p -1.80%
FTSE 250 - Risers
Genus (GNS) 2,110.00p 3.74%
Ithaca Energy (ITH) 236.80p 3.70%
Trustpilot Group (TRST) 286.00p 3.70%
Clarkson (CKN) 4,622.00p 3.54%
W.A.G Payment Solutions (EWG) 108.40p 3.44%
Hochschild Mining (HOC) 461.60p 3.31%
RS Group (RS1) 644.00p 2.63%
Harbour Energy (HBR) 229.80p 2.59%
BlackRock World Mining Trust (BRWM) 896.00p 2.40%
Rank Group (RNK) 96.60p 2.22%
FTSE 250 - Fallers
Ceres Power Holdings (CWR) 422.40p -5.97%
Hikma Pharmaceuticals (HIK) 1,496.00p -4.96%
ITV (ITV) 71.85p -3.56%
WPP (WPP) 274.40p -3.00%
SSP Group (SSPG) 187.60p -2.65%
Workspace Group (WKP) 343.20p -2.50%
Hays (HAS) 47.64p -2.34%
Diversified Energy Company (DI) (DEC) 997.00p -2.25%
Worldwide Healthcare Trust (WWH) 380.50p -2.06%
WH Smith (SMWH) 398.00p -2.02%