LONDON, March 19, 2026, 17:54 GMT
The FTSE 100 dropped 2.4% on Thursday, closing at a low not seen in roughly two months, with investors reacting to the Bank of England’s decision to keep rates steady and another jump in oil prices that sapped risk appetite. The FTSE 250 slid 2.4% too—its worst finish since November—after fresh attacks on Middle Eastern energy sites fed fresh inflation fears. 1
This comes as a shift for London stocks, which were following a different pattern until recently. Back on Feb. 18, the FTSE 100 notched a record close of 10,686.18, lifted by softer inflation data and optimism for rate cuts. Now, after policymakers suggested inflation could hit 3.5% over the next two quarters, traders have pivoted, pricing in two quarter-point hikes from the Bank of England before the year is out. 2
Sellers hit nearly every corner of the blue chips, with 97 out of 100 names closing in the red. Metal miners plummeted 7.8%, and banks shed 4.3%. Energy bucked the trend, finishing up 1.6%. BP jumped 4.9% after it struck a deal to offload its Gelsenkirchen refinery and lifted its cost-cut target. HSBC, on the other hand, slid 3.1% after Bloomberg said the bank was weighing as many as 20,000 job cuts. 1
The Bank of England left its key rate unchanged at 3.75% after a unanimous 9-0 decision, defying the 7-2 split predicted in a Reuters poll. Governor Andrew Bailey commented, “We have held interest rates at 3.75% as we assess how events unfold.” The central bank also reiterated it’s prepared to respond if inflation risks intensify. 3
Bond traders wasted no time. Yields on two-year UK government paper jumped to 4.486%—levels not seen since January 2025—before slipping. Sterling hovered near $1.3297, with investors rethinking rate-cut wagers. 4
Analysts dialed up the caution, but there was no mistaking the sharper edge in their comments. “A more important battle” is how Nick Saunders, Webull UK’s chief executive, framed inflation for the Bank. Aberdeen deputy chief economist Luke Bartholomew called out the high bar for another hike, warning “the economy could be facing a long wait until the next cut.” 1
London wasn’t the only market under pressure. The STOXX 600 slid 2.4%, with Frankfurt, Paris, and Milan each tumbling over 2% as the European Central Bank held rates steady and cautioned that the conflict could further stoke inflation. “There was not enough confidence in the market to drag stocks higher,” said Michael Field, chief European equity strategist at Morningstar. 5
The shift was swift. On Tuesday, the FTSE 100 climbed 0.83%, boosted by banks and energy shares ahead of the BoE meeting. But the next day, it slipped 0.9%—oil prices spiked after a strike hit Iran’s South Pars gas field and Tehran threatened to hit back. 6
Still, things can flip. UK wage growth cooled to 3.8% over the three months ending January—that’s the slowest since late 2020. Later, Bailey cautioned investors against making assumptions on rate hikes. Rob Wood, Pantheon Macroeconomics’ chief UK economist, pointed to surging energy futures, saying they’re “on the borderline” for a hike in his scenario analysis. 7
Right now, oil and gas prices are in focus, along with the Bank’s upcoming April 30 call. On Thursday, energy stood alone as the only FTSE sector finishing higher. 8
