FTSE 100 to open flat amid US-Iran tensions and bond sell-off

The FTSE 100 index was expected to open flat on Monday, with IG futures indicating a slight gain in early trading. The blue-chip index closed the previous week at 10,816, marking a 0.6% increase. This rise followed a week of mixed trading, influenced by escalating US-Iran tensions and a significant sell-off in long-dated US Treasury yields, which reached their highest point since the global financial crisis. Investors expressed concerns about the US administration's handling of public finances, leading to broader market sell-offs in the UK and France.

Over the weekend, tensions between the US and Iran intensified. Iran issued a threat of 'earthquake-like retaliation' in response to President Trump's declaration of an 'economic D-Day' for the country, urging Gulf nations to impose sanctions. This geopolitical backdrop contributed to a challenging market environment.

Dan Coatsworth, head of markets at AJ Bell, noted that global markets had lost their footing after weeks of apparent recovery. He highlighted that the FTSE 100 performed relatively well due to its significant exposure to resources stocks. Gold prices surged past $4,500, driven by their status as a safe-haven asset and an inflation hedge. Coatsworth suggested that upcoming results from Nvidia could refocus attention on corporate earnings, but cautioned that a 'chill' was descending upon markets as autumn approaches. Investors would likely seek reassurance from Federal Reserve chair Kevin Warsh's address at the Jackson Hole meeting.