FTSE 100 faces flat open amid US-Iran tensions and rising inflation

The FTSE 100 is expected to open broadly flat following the Summer Bank Holiday, as investors weigh geopolitical tensions in the Middle East and rising inflation data in the UK.

Renewed conflict between the US and Iran has increased market uncertainty. Following US strikes on an Iranian island in the Strait of Hormuz, Brent crude rose to $90.84 per barrel. President Donald Trump has warned of significant consequences for Iran following retaliatory attacks on US military targets.

In the UK, shop price inflation accelerated to 1.5% in August, up from 0.9% in July, marking a two-year high. Food inflation also rose to 2.8%.

On the performance front, the FTSE 100 is currently performing closely with the S&P 500. Over the last 12 months, the FTSE 100 climbed 17.7%, with a total return of approximately 21% when including dividends. This compares to a 20.2% growth for the S&P 500, with a total return of 21.2%. While the US index benefits from large technology companies, the FTSE 100 offers a higher typical dividend yield of approximately 3.3% compared to 1.1% for the S&P 500.