LONDON, April 2, 2026, 18:03 BST
Shell, BP, and AstraZeneca gave London’s FTSE 100 a 0.6% boost on Thursday, after news broke that Britain will host talks about reopening the Strait of Hormuz—a vital oil route in the Gulf. The FTSE 250 slipped 0.2%.
This shift landed just two days after the UK’s main indexes saw their sharpest monthly drop since 2020, with traders now staring down a four-day Easter stretch. One headline from Hormuz is enough to shake up oil, inflation trades, and outlooks on rates. Thursday’s bump? More of a defensive pause than any real sign of relief.
London outperformed most of Europe. The STOXX 600 ended off 0.2%, paring heavier losses from earlier in the session—at one point the index was down as much as 1.6%. Tech, mining, and banking stocks dragged, as traders considered the potential for Hormuz to reopen, while President Donald Trump’s tough stance on Iran added another layer of uncertainty.
Oil was front and center again. U.S. crude surged over 11%, with Brent circling $107.5 a barrel after Trump warned of intensifying strikes on Iran and left the crucial waterway’s reopening in limbo. “War sentiment has turned to further escalation before de-escalation,” Dennis Kissler, senior vice president of trading at BOK Financial, said. Reuters
Thursday brought gains after a big relief rally the previous day: the FTSE 100 surged 1.8% and the FTSE 250 shot up 2.2%, buoyed by Trump hinting the U.S. might exit the war soon. Optimism didn’t stick.
Policy questions loom. Firms now anticipate price hikes of 3.7% over the next year, according to a Bank of England survey—an uptick from 3.4% back in February. Traders responded by fully pricing in two quarter-point hikes this year, totaling half a percentage point. “Second-round effects” remain a big concern, Pantheon Macroeconomics senior economist Elliott Jordan-Doak said. Reuters
Bank of England Governor Andrew Bailey pushed back on those expectations Wednesday, telling Reuters that markets were “getting ahead of themselves.” Bailey argued companies don’t have much pricing power right now. J.P. Morgan’s top UK economist Allan Monks, in a note, pointed out that Bailey’s comments implied most policymakers wouldn’t support an April hike. Reuters
Company sentiment is already cracking under pressure. ICAEW reported that business confidence slid from +2.8 ahead of the conflict to -1.1 by March 16. “The first quarter was a tale of two halves” for the UK, chief economist Suren Thiru said. If the war drags on and energy prices remain high, the lift in oil majors and drugmakers could keep masking a weaker UK picture; if not, markets could flip direction fast. Reuters
