The FTSE 100 share index recorded its largest one-day fall since April 2025 on Tuesday, dropping 1.6% or 172 points to 10,738, as fears of a protracted conflict between the US, Israel and Iran roiled global markets. The blue-chip index was dragged down by travel and banking stocks, while oil producers and defence companies rallied.
The broader FTSE 250 index of medium-sized companies also fell 1.5%. Across Europe, Germany's DAX dropped 2.7%, France's CAC 40 lost 2.2%, and Italy's FTSE MIB slid 2.4%. In the US, the Dow Jones Industrial Average was down 488 points (1%) at 48,489, with the S&P 500 and Nasdaq Composite also falling.
Oil prices surged as the conflict threatened shipping through the Strait of Hormuz, boosting shares of energy firms. Harbour Energy jumped 6.5% and Ithaca Energy rose 5.5%, while protective clothing maker Avon Technologies gained 3.8%. However, travel companies and banks slumped on concerns over higher fuel costs and economic uncertainty.
The chance of a UK interest rate cut this month tumbled to 48%, down from 80% last week, as higher oil and gas prices are expected to drive up inflation. The Bank of England's Monetary Policy Committee is due to meet on 19 March, with policymakers divided on the path for rates. MPC member Alan Taylor argued the Bank should not raise rates to counter energy price spikes, saying such shocks move faster than central banks can respond.
In the energy sector, QatarEnergy is set to declare force majeure on liquefied natural gas shipments after halting production following attacks on its facilities, according to Reuters. The move will allow the company to avoid contractual obligations due to unforeseeable events.
