London pre-open: Stocks seen flat despite escalating Middle East tensions
By Michele Maatouk
Date: Monday 16 Jun 2025
(Sharecast News) - London stocks were set for a steady open on Monday despite escalating tensions in the Middle East.
The FTSE 100 was called to open flat at 8,851.
Kathleen Brooks, research director at XTB, said: "The focus as we start the new trading week is the escalating tensions between Iran and Israel. There have been strikes from both sides, and there is currently no end in sight, even as world leaders urge for calm. Headline risk is huge as we start a new week. The risk off tone to markets was clear at the end of last week, although the market reaction has been moderate so far on Monday.
"For now, it does not look like the markets are pricing in the possibility of a supply side shock for oil. The oil price is higher by a mere 0.5%. and is below $75.00 per barrel, and the gold price is falling. European and US stock market futures are pointing to a higher open later today."
"So, why the sense of calm in financial markets when the war between the two countries continues to rage? President Trump seemed to calm fears when he said that the two sides could find a resolution, but they need to fight it out first. The prospect of US involvement in this conflict used to spook markets, however, now there is a chance that Trump could have a holistic influence. Reports suggest that Trump vetoed an Israeli plan to assassinate Iran's Supreme Leader, which suggests that he is already having a moderating impact on this conflict, although there has been no direct involvement by US troops.
"Due to this, there may need to be a major escalation in the conflict before we get another sharp upswing in oil and gold prices. Financial markets are very good at absorbing geopolitical risk, and Opec+'s supply boost is also helping to cushion the blow.
"Back in 2022, when Russia invaded Ukraine, the oil price rose by more than 80% in the weeks and months before Russia invaded Ukraine, however, we may not cross the $100 per barrel level this time. There is expected to be excess oil supply this year and next, which will absorb some of the geopolitical risks for the oil price. Added to this, Opec + Is already boosting their supply, so oil traders will be discounting the supply boost when considering the impact from this latest geopolitical conflict."
Away from geopolitics, all eyes will be on central bank policy announcements this week, with decisions due from the Bank of Japan on Tuesday, the Federal Reserve and Riksbank on Wednesday and Norges Bank, the Bank of England and the Swiss National Bank on Thursday.
Investors will also be mulling the latest house price index from Rightmove released earlier, which showed that house prices eased in June following stronger-than-expected growth in April and May.
Prices eased by 0.4% in June, compared to a 0.6% uplift in May and April's 1.4% jump. The average asking price is now £378,240.
Rightmove said the fall was unusual for June. The average June increase has been 0.4% over the last ten years.
However, it noted that the dip followed "stronger-than-expected price growth in April and May, and appears to be part of a delayed response to increased stamp duty tax".
Changes to stamp duty thresholds came into effect in April, causing a rush of sales as people hurried to complete ahead of the deadline.
Agreed sales were 6% higher year-on-year in June, the highest number of sales agreed in any month since March 2022.
Rightmove's Colleen Babcock said: "It appears that we're now seeing the decade-high level of homes for sale, and the recent stamp duty increases in England, have a delayed impact on new sellers' pricing.
"Agents have been telling us that sellers need to set a competitive price to have a better chance of finding a buyer in the current market, and it looks like many are listening and responding to that message.
"Such realistic pricing will remain key in the coming months."
Year-on-year, house prices rose 0.8% in May.
In corporate news, gambling and sports betting group Entain upgraded its guidance for BetMGM following a strong first half from the US division.
The company, which owns a 50% share of BetMGM with MGM Resorts, said net revenue growth in the second quarter so far was consistent with the 34% year-on-year surge seen in the first three months of the year.
As a result, BetMGM revenues are expected to be "at least $2.6bn", up from the previous $2.4bn-2.5bn range and the $2.1bn generated last year.
Elsewhere, consulting and engineering firm Wood Group and its joint venture partner, Tendrill International, said they have secured a five-year contract with Brunei Shell Petroleum for brownfield engineering, procurement, and construction services.
Under the contract, the TendrillWood JV will deliver integrated, end-to-end brownfield EPC projects across Brunei Shell Petroleum's offshore and onshore assets.
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