LONDON, March 12, 2026, 17:06 GMT
The UK’s main stock indexes slipped once more on Thursday. Late Reuters figures had the FTSE 100 dropping 0.47% to 10,305.15, while the FTSE 250—whose focus is more domestic—shed 0.83% and settled at 22,194.55. Oil rebounded toward $100 a barrel after fresh strikes on fuel tankers off Iraq, stirring up those inflation worries that have been weighing on London stocks.
This shift matters, with UK stocks having counted on a possible cut to borrowing costs. But in money markets, the outlook flipped fast: traders now put the odds of a quarter-point rate hike by December at 54%—just a day ago, no move was expected. Britain’s heavy dependence on imported gas heightens the risk here compared to other economies if another energy shock hits.
Economists are striking a tougher note. UBS’s Dean Turner put the odds on a later Bank of England cut, saying an April move now looks “more likely than not.” Goldman Sachs, for its part, postponed its rate-cut call for the second time this month, citing uncertainty around inflation as energy prices edge higher. Reuters
Just two weeks back, the index hovered close to its all-time highs. On Feb. 26, the FTSE 100 wrapped up at a record 10,846.70. That puts Thursday’s finish about 5% under that peak.
Sellers hit most corners of the market, though the drop was less severe for the FTSE 100. Defence, mining, and utilities names managed to fend off much of the pressure. By the end, most FTSE 350 sectors were still underwater.
Banks took a hit again. HSBC slid over 5% Thursday, Reuters said, following the shutdown of its Qatar branches. JPMorgan pointed to HSBC and Standard Chartered as the European banks with the largest exposure to the conflict. Barclays, by comparison, sees less than 1% of its revenue and profit coming from the region. “Additional risks” in trade finance and credit costs are possible amid the uncertainty, according to Morningstar’s Kathy Chan. Reuters
The mood at home soured as well. February’s RICS survey put new buyer enquiries at a net -26, sliding from -15 in January. Tarrant Parsons of the trade group pointed to the worsening international backdrop, saying it had “clearly weighed on confidence,” with pricier energy raising the risk that mortgage rates stay high. Reuters
Some bright spots emerged. TP ICAP climbed 7.3%, buoyed by a 3.6% increase in annual pretax profit—proof that turbulence in the markets isn’t all bad news for trading outfits, even if it rattles everyone else.
Still, the risk is clear enough. Goldman Sachs warns that unless the energy shock subsides soon, the Monetary Policy Committee might manage just a single rate cut this year—or skip it altogether if things deteriorate. If oil flows through the Strait of Hormuz get blocked for a month, their upside scenario puts Brent at an average of $110.
The shift could easily fizzle out. Monica Guerra of Morgan Stanley Wealth Management notes that equity volatility sparked by geopolitics usually doesn’t stick around for long. Still, with oil prices elevated, figuring out the policy path gets trickier—and in London, that’s taking precedence over earnings for now.
