London, March 21, 2026, 18:22 GMT
The FTSE 100 wrapped up the week at 9,918.33, dropping 1.44% Friday and slipping 3.34% since Monday, as fresh hits from oil and rates late in the week pushed it below 10,000. The FTSE 250 also took a hit, settling at 21,341.97 after a 1.01% fall Friday and a 3.30% loss for the week.
Investors spent most of 2026 betting on looser policy, but Thursday, March 19, brought a shift. The Bank of England left rates unchanged at 3.75% in a unanimous call and flagged inflation could top out at 3.5% in the next two quarters. The central bank also signaled it was ready to step in if needed, and markets quickly moved to price in two quarter-point hikes this year.
The spark? Oil. Brent crude finished Friday at $112.19 a barrel—the highest close since July 2022. Fresh supply interruptions in the Middle East have stoked renewed anxiety that the inflation jolt might stick around longer than traders were counting on.
London wasn’t the only one under pressure. The STOXX 600 in Europe dropped 1.8% on Friday, ending the week down 3.8%—that’s three weeks in the red. Traders across the region dumped hopes for rate cuts, pivoting again to tighter policy.
Sellers dominated London markets by Friday, sending the FTSE 100 lower as aerospace, defence, and banking shares weighed heavily. Energy names slipped 1.7%, even though the sector hovered close to record territory. Smiths Group plunged 9.8%—the stock slumped after half-year organic revenue came up short. Over at JD Wetherspoon, shares dropped 10.6% after the pub chain warned that full-year profit might fall short of market expectations.
Thursday’s action was telling. HSBC slid 3.1% after Bloomberg broke news the bank is considering slashing up to 20,000 jobs. BP, meanwhile, surged 4.9%—the company inked a deal to sell its Gelsenkirchen refinery and tightened its cost-cut plan, which for a moment left energy alone in the green on the FTSE. Nick Saunders, chief executive at Webull UK, put it bluntly: the Bank “cannot afford to fight a battle on two fronts.” Reuters
The bond market left little room for doubt: Britain’s 10-year gilt yield climbed past 5% on Friday. Rate cut hopes are “fading fast,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. ING’s Padhraic Garvey didn’t see any bright spots either—“nothing positive has happened so far” in the conflict, he noted. Reuters
Public finances aren’t helping the picture. Borrowing for February hit 14.3 billion pounds, blowing past the 8.5 billion-pound forecast, according to Reuters. Pantheon Macroeconomics economist Elliott Jordan-Doak noted the government faces hefty pressure to shield households from rising energy bills.
But there’s no consensus on what’s coming next. J.P. Morgan is penciling in quarter-point BoE hikes for April and July, assuming the disruption drags on. Morgan Stanley, though, points to the possibility of a “very swift resolution” in the Middle East, which could bring a late-2026 rate cut back into play. Reuters
Next week, attention swings to oil, gilts, and any hint of a policy move out of Westminster, with company headlines taking a back seat. Reuters said Saturday that Prime Minister Keir Starmer plans an emergency sit-down with top ministers and Governor Andrew Bailey, looking for ways to help households squeezed by spiking energy and mortgage bills—a clear sign the City’s turmoil is reaching into the broader economy.
