The pound, and UK government bonds, are holding up well despite the governing Labour party having a bad local election.Sterling has risen by a third of a cent against the US dollar to $1.3585, holding those gains after prime minister Keir Starmer told the media “I’m not going to walk away,” after Labour lost hundreds of council seats, with counting continuing in many places.UK bond prices have dropped slightly, pushing up the yield (or interest rate) on gilts slightly.That, though, may reflect concerns that the higher oil prices will push up inflation and hurt growth.

The UK’s 30-year bond is up just 1.5 basis points (0.015 of a percentage point) at 5.62%, below the 28-year high (5.778%) hit earlier this week.

Analysts had suggested that the local elections could cause ructions in the markets, if traders concluded that a change of prime minister, and higher government spending, was likely.London’s stock market is sliding at the start of trading.The FTSE 100 index has dropped by 67 points, or 0.65%, to 10,209 points.IAG are among the top fallers, down 5%, after the airline group warned this morning that profits this year will be lower than expected due to the jump on fuel prices.

Intertek Group have dropped by 6.5% after rejecting a takeover approach.British Airways’ parent company has warned its earnings will be lower than expected as the Iran war drives up the cost of jet fuel.International Airlines Group (IAG) told the City this morning that it expects a “more substantial impact” from the Middle East crisis throughout the rest of the year as the increase in the fuel cost starts to manifest itself.As a result, IAG expects its profit to be lower than originally anticipated at the beginning of the year.

IAG also cautions that if the current conflict continues to restrict flows of both crude oil and jet fuel from the Middle East, “there is the potential for supplies of jet fuel to be restricted on a global basis”.IAG chief executive Luis Gallego says:double quotation mark“We are actively managing the uncertainty created by the fuel price increase and its impact, taking the necessary action on yields, costs and capacity.We currently see no issues with fuel availability in our main markets, particularly as we benefit from our investment in fuel self-supply at our hubs.Whilst the impact of the higher fuel price will inevitably lead to lower profit this year than we originally anticipated, we are confident in our business model and strategy, which has made us one of the best-performing airline groups in the world, and which gives us the opportunity to prove our resilience.This confidence means we are on track to continue with the remaining €1 billion return of excess cash.

Across the UK, house prices are rising faster in the north of the country, and falling parts of the South.Halifax reports:Northern Ireland still leads UK annual house price growth, with average prices up +7.6% over the past year to £224,851.Scotland also recorded strong growth, rising +4.0% annually to an average price of £222,448.

Wales has seen property price growth continue to slow, now +0.7% on annual basis, taking the typical home value to £230,952.The North East of England saw prices rise +4.5% over the year to £183,445, while the North West recorded annual growth of +3.4%, with the average home now costing £248,945.

By contrast, the southern markets continue to see prices fall.The South East led declines, with prices down -2.0% year‑on‑year to £383,044, while London saw average values fall by - 1.4% to £536,051.British house prices fell by 0.

1% in April as the Iran war hit confidence and drove up borrowing costs,New data from mortgage lender Halifax that the average house price edged down by 0,1% in April, following a -0,5% fall in March,The average property price has dipped to £299,313, compared with £299,609 a month earlier.

On an annual basis, annual house price inflation slowed to just 0.4%, from 0.8% in the year to March, Halifax’s monthly house price index has found.Amanda Bryden, head of mortgages at Halifax, say:double quotation mark“After a strong start to the year, recent global developments have added a greater degree of uncertainty to the outlook.In particular, higher energy prices have fed into inflation expectations, prompting markets to reassess the path for interest rates – a shift that has already pushed up borrowing costs for many buyers.

“This understandably leads to more caution among some households, with the cost-of-living once again front of mind and extra thought being given to planned property moves.“Even so, the housing market continues to display the resilience that has been its hallmark in recent years.While activity is likely to cool in the near term, the underlying picture remains one of relative stability, supported by wage growth that continues to outpace house price inflation.“Another important factor is that the majority of existing homeowners are on fixed-rate mortgages, meaning they are largely insulated from short term changes in interest rates.Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Oil is back over $100 a barrel as the US-Iran ceasefire came under strain, undermining hopes of an early reopening of the strait of Hormuz.Overnight,the US and Iran exchanged fire, with Tehran accusing Washington of violating the ceasefire by targeting two ships at the strait of Hormuz and attacking civilian areas.The US, though, insisted it struck Iranian targets in retaliation for “unprovoked” attacks on three US warships transiting the strait on Thursday.Cue a predictable jump in the oil price, two days after hopes of a peace deal breakthrough pushed it down.This morning, Brent is up 1% at $101 a barrel.

That’s a fairly modest move, suggesting investors are still hoping that a deal will eventually be reached.After all, president Donald Trump has described Iran’s attack on US destroyers as “just a love tap”, and insisted the ceasefire between the two countries is still in effect.Markets have slipped back thanks to questions about whether the US-Iran ceasefire is holding, reports Jim Reid of Deutsche Bank:double quotation markQuestions around the ceasefire have already had a market impact in Asia overnight, where all the major equity indices have lost ground.That includes the Nikkei (-0.69%), the KOSPI (-0.

73%), Hang Seng (-1.17%), CSI 300 (-0.90%) and the Shanghai Comp (-0.43%).Moreover, European equity futures are down, with those on the FTSE 100 (-0.

70%) and the DAX (-0.87%) both lower, although US futures have picked up a bit after yesterday’s losses, with S&P 500 futures up +0.21%.It’s going to be a busy day in the markets, with April’s US jobs report due at 1.30pm.

City traders will also be watching the results of local elections across the UK, where Labour have already lost control of several councils.7am BST: Halifax house price index8.30am BST: UN’s FAO Food Price Index1.30pm BST: US non-farm payroll report for April3pm BST: University of Michigan survey of US consumer confidence