LONDON, March 19, 2026, 17:54 GMT
The FTSE 100 fell 2.4% on Thursday, settling at its lowest in about two months after the Bank of England held rates steady. A surge in oil prices further dented risk appetite. The FTSE 250 matched the drop—down 2.4%, marking its weakest close since November. Renewed attacks on Middle Eastern energy sites stoked inflation jitters.
A noticeable turn for London stocks here. Not long ago, on Feb. 18, the FTSE 100 scored a record close at 10,686.18—helped along by easing inflation and hopes for rate cuts. Now, though, with policymakers flagging inflation could reach 3.5% in the coming two quarters, traders have switched gears and are now betting on two quarter-point Bank of England hikes before the year wraps up.
Sellers tore through almost the entire blue-chip board, leaving 97 out of 100 stocks in negative territory. Metal miners got hammered, sinking 7.8%, while banks dropped 4.3%. One pocket of green: energy, up 1.6%. BP surged 4.9%—the company announced it’s unloading its Gelsenkirchen refinery and boosting its cost-cut goal. But HSBC lost 3.1%, after Bloomberg reported the lender is considering up to 20,000 layoffs.
The Bank of England surprised markets by keeping its main rate steady at 3.75%, with all nine policymakers backing the hold—contrary to the 7-2 split many had expected, according to a Reuters poll. “We have held interest rates at 3.75% as we assess how events unfold,” Governor Andrew Bailey said. The bank repeated its stance that it stands ready to act if inflation pressures ramp up. Bank of England
Bond traders moved swiftly. The yield on the UK’s two-year government bonds surged to 4.486%, marking a high not reached since January 2025, before easing back. Sterling held close to $1.3297 as traders recalibrated their expectations for rate cuts.
Analysts weren’t pulling punches this time, their tone unmistakably more cautious. Nick Saunders, chief executive at Webull UK, described inflation as “a more important battle” for the Bank. Aberdeen’s deputy chief economist Luke Bartholomew flagged the tough hurdle for any fresh hike, cautioning that “the economy could be facing a long wait until the next cut.” Reuters
Pressure wasn’t confined to London. The STOXX 600 dropped 2.4%. Frankfurt, Paris, and Milan all sank more than 2% after the European Central Bank left rates unchanged and warned the conflict might push inflation higher. “There was not enough confidence in the market to drag stocks higher,” said Michael Field, chief European equity strategist at Morningstar. Reuters
Markets moved quickly. The FTSE 100 tacked on 0.83% Tuesday, lifted by gains in banks and energy stocks before the BoE meeting. By Wednesday, the index lost 0.9% as oil surged—following a strike at Iran’s South Pars gas field and retaliation threats from Tehran.
But momentum can shift. UK wage growth dropped back to 3.8% for the three months through January—the softest pace since late 2020. Bank of England Governor Andrew Bailey later warned investors not to take rate hikes for granted. Rob Wood, chief UK economist at Pantheon Macroeconomics, flagged sharply higher energy futures, calling them “on the borderline” for a hike in his scenario analysis. Reuters
Oil and gas prices are grabbing attention ahead of the Bank’s April 30 meeting. Thursday saw energy as the single FTSE sector to close in the green.
