London, March 22, 2026, 17:15 GMT
London stocks head into the new week under pressure after the FTSE 100 ended Friday at 9,918.33, down 1.4%, while the FTSE 250 closed at 21,341.97, down 1.0%, capping a third straight weekly loss. Brent crude settled at $112.19 a barrel, the highest since July 2022, and analysts said oil looked set to rise further when markets reopen on Monday. 1
That matters now because UK shares are taking the shock through both inflation and rates. The Bank of England held rates at 3.75% on Thursday and said inflation could reach 3.5% over the next two quarters. Governor Andrew Bailey cautioned against rushing to conclusions on hikes, but Pantheon Macroeconomics’ Rob Wood said energy futures were near the point where a move higher in rates would be warranted, while Aberdeen’s Luke Bartholomew said the hurdle to tightening was still high even if the next cut might be a long way off. Brokerages are nonetheless shifting fast: J.P. Morgan now expects quarter-point BoE hikes in April and July, and Citigroup said any move remains “path dependent.” 2
The bond market is sending the same warning. Yields on 10-year gilts — British government bonds — pushed above 5% on Friday, their highest since the financial crisis, while February public borrowing came in at 14.3 billion pounds against a Reuters poll forecast of 8.5 billion pounds. Elliott Jordan-Doak at Pantheon said pressure on the government to shield households from higher energy bills “will be great.” 3
Inside the market, the damage is spreading unevenly. Reuters said aerospace and defence stocks and banks were the biggest drags on Friday, Smiths Group fell 9.8% after missing half-year organic revenue forecasts, and JD Wetherspoon dropped 10.6% after warning full-year profit could miss expectations as energy costs and wage-related taxes cut first-half profit. 4
Yet the FTSE 100 still has some oil support. BP ended Friday at 5.62 pounds and Shell at 3,434 pence, giving the blue-chip index two heavyweights that could steady it if crude keeps rising. 5
That is not a clean hedge. IG’s Tony Sycamore said the U.S. ultimatum to Iran had placed a “48-hour ticking time bomb of elevated uncertainty over markets” at the start of the week. Amrita Sen, founder of Energy Aspects, said some investors were wrongly assuming Iran would cave, leaving the risk of another jump in oil hanging over Monday’s open. 6
The next tests land quickly. Flash PMI surveys — early monthly gauges of private-sector business activity — are due on Tuesday, followed by UK consumer and producer price data on Wednesday at 7:00 a.m. and retail sales on Friday at 7:00 a.m., according to the Office for National Statistics. S&P Global Market Intelligence said the March PMI readings should provide the first clear signal of how the war is feeding through to costs, supply chains and demand; January CPI was 3.0%. 7
A less severe scenario remains possible. G7 ministers said on Saturday they stood ready to act to support global energy supplies and protect routes including the Strait of Hormuz, while Reuters reported that Prime Minister Keir Starmer will hold an emergency meeting next week with senior ministers and Bailey on the cost-of-living fallout. For London equities, the week ahead now turns on one clear question: whether crude stabilises soon enough to stop the pressure moving from commodity markets into consumer spending and earnings.
