London, March 2, 2026, 17:31 GMT — After-hours
- FTSE 100 ended the day off 1.2%, while the FTSE 250 slipped 1.4% as investors pulled back from risk.
- Oil climbed, boosting energy and defence shares. Banks and travel stocks, though, bore the losses.
- Higher energy prices rattled traders, who trimmed their expectations for rate cuts as inflation concerns crept back in.
The FTSE 100 dropped 1.2% on Monday, closing at 10,780.11, halting its streak after reaching new peaks last week. Losses hit the FTSE 250 a bit harder; it slipped 1.4% to finish at 23,423.64. 1
Oil set things off. Prices surged as Iranian retaliation blocked shipping in the Strait of Hormuz after weekend strikes from Israel and the United States, pushing London shares down along with global markets. “If the issues persist, then the market will start to worry about new inflationary pressures,” said Dan Coatsworth, head of markets at AJ Bell. 2
The inflation issue is squarely in front of the Bank of England now, at a time when investors had positioned themselves for rate cuts. Alan Taylor, a Bank policymaker, cautioned it was “really too soon to tell” what the conflict might mean for the UK’s already sluggish economy. Traders moved quickly, chopping the implied chance of a March cut to under 50%, down from nearly 80% before the market session. 3
Defence names and energy shares did the heavy lifting. BAE Systems picked up 6.1%, Shell tacked on 2.5%. WPP dropped 7.6%—the steepest fall among majors—while Standard Chartered was off 5.3%. Brent crude jumped nearly 6%. Gold edged just over 1% higher. Sterling weakened about 0.6% versus the dollar. 4
The FTSE 250 slipped to 23,334.64 during the session but managed to finish at 23,423.64. Investors often watch this mid-cap index as a gauge for the UK economy, given its heavier tilt toward domestically focused firms compared to the FTSE 100. 5
Energy wasn’t only a crude story. European benchmark gas prices surged, stoking fresh worries over rising household and business bills if supply snags persist. 6
Signs of a slowdown in the UK economy emerged Monday as mortgage approvals dropped to 59,999 in January, marking a two-year low. Consumer credit, on the other hand, climbed beyond forecasts. Ruth Gregory, deputy chief UK economist at Capital Economics, warned, “The growing risk is that an inflationary shock … puts a handbrake on growth this year.” 7
Deal chatter gave equity specialists something to chew on. Zurich Insurance has struck an £8.1 billion deal for FTSE 100 constituent Beazley, handing Beazley shareholders 1,335 pence a share; Beazley shares closed up 1.8%. Zurich chief Mario Greco called the merger a move to “create the world’s leading Specialty underwriter.” 8
Winners and losers in London traded much like their European peers—banks and travel shares slid, while energy and defence stocks found support. Paolo Zanghieri, senior economist at Generali Investments, described the U.S.-Israeli strikes on Iran as “explicitly aimed at regime change,” adding this could keep the oil risk premium elevated for an extended period. 9
Still, the tape’s moving with the headlines. Fast de-escalation might send oil sliding, easing up on those rate-cut bets. If shipping stays snarled, though, airlines, retailers, and banks probably stay under fire.
Investors are now looking ahead to the Bank of England’s policy call slated for March 19. Oil prices and the latest out of the Middle East are likely to steer sentiment heading into the next London trading session. 10
