British stocks posted modest gains on Tuesday as stronger-than-expected economic data for the first quarter provided support to the market even while international developments left uncertainty over the prospect of a lasting Iran-U.S. agreement.
Market movers and currency
The FTSE 100 was up 0.16% as of 03:20 ET (07:20 GMT). On the Continent, Germany's DAX rose 0.80% and France's CAC 40 gained 0.33%. The pound slipped against the dollar, with GBP/USD down 0.05% at 1.3245.
Economic picture
The Office for National Statistics reported that UK gross domestic product increased by 0.6% in the first quarter, a result that matched the preliminary estimate published in May. The rise represents an acceleration from the revised 0.1% growth recorded in the previous quarter. Expansion was broad-based, with all three main sectors contributing and the services sector leading the advance with 0.8% growth.
Despite the stronger headline GDP figure, the ONS lowered its annual GDP growth forecast for 2025 to 1.3% from 1.4%. Household-level metrics painted a less healthy picture: real household disposable income per person declined by 0.8% over the quarter, and the household saving ratio fell to 8.9% from 9.6%.
Those diverging signals - an economy expanding at the aggregate level while households face weaker finances - help explain the market's muted reaction. The headline strength supports risk assets, but the squeeze on disposable income and lower savings create pressure on consumer-facing sectors.
Geopolitical developments and negotiations
International diplomacy added ambiguity to market sentiment. U.S. President Donald Trump said Iran talks were being hosted in Qatar on Tuesday and that envoy Steve Witkoff was en route to Doha. That comment was at odds with Iran's Foreign Ministry spokesperson Esmaeil Baghaei, who stated that no talks with the United States were scheduled at any level in the coming days, although he noted that an expert delegation would travel to Doha later in the week.
Baghaei also said the two sides had not yet reached the stage of negotiating a final agreement, a position consistent with a denial by Iranian negotiator Kazem Gharibabadi a day earlier that technical talks had been set. The White House press secretary Karoline Leavitt said Witkoff and Jared Kushner would fly to Doha this week for high-level talks, with technical discussions to take place on the sidelines.
Along the Strait of Hormuz, accounts diverged on planned actions. French President Emmanuel Macron said France and Oman had agreed to collaborate with international partners on demining, while Iran's deputy foreign minister said Iran would carry out the work alone and criticized Macron's comments as provocations. MarineTraffic data indicate that traffic through the chokepoint remains only a fraction of pre-war levels.
Iranian President Masoud Pezeshkian was quoted saying Tehran will honor commitments if the U.S. does the same, while warning of a firm response to threats. He also said half of Iran's $12 billion in frozen Qatar-held assets will be returned - an issue on which the U.S. has issued conflicting statements.
Separately in Lebanon, Parliament Speaker Nabih Berri, a Hezbollah ally, said the US-brokered agreement with Israel "won't be implemented," while fighting between Hezbollah and Israeli forces continued over the weekend despite the new truce.
Commodities and corporate news
Energy and precious metals showed divergent moves. Brent crude slipped 0.51% to $73.53 a barrel, while West Texas Intermediate fell 0.62% to $70.31. Gold futures edged up 0.10% to $4,043.02 an ounce, and spot gold rose 0.31% to $4,029.22.
In corporate updates, Shell Plc projected that global LNG demand will rise 65% by 2050 to nearly 700 million metric tons annually, citing Asian demand and increased power needs from data centres. J Sainsbury Plc reported 2.1% like-for-like sales growth in the first quarter, a result below forecasts and lower than the previous quarter, while retaining its full-year profit guidance.
Implications for investors
The combination of a stronger GDP print and household-level weakness suggests the economy is producing output gains that are not translating evenly into consumer strength. That dynamic has sectoral consequences: consumer discretionary and retail names may feel pressure from squeezed household finances, while services and industrial sectors could benefit from broader activity growth. Geopolitical uncertainty around Iran and transit through the Strait of Hormuz adds a supply-side risk premium periodically reflected in energy markets.
For investors tracking near-term market drivers, the interplay between macro data and geopolitical signals will be key. The headline GDP boost underpinned the FTSE 100's modest advance, but ongoing ambiguity over Iran-U.S. talks and regional tensions keeps potential shocks on the table.