UK stocks dip as Iran conflict sparks global selloff
Tweet
Share
E-mail
FILE PHOTO: Signage is seen outside the LSEG (London Stock Exchange Group) headquarters in Paternoster Square, London, Britain, April 25, 2025. REUTERS/Toby Melville/File Photo
March 2 (Reuters) - UK stock indexes were swept up in a global selloff on Monday, as an escalating military conflict in the Middle East fuelled a jump in oil prices and drove investors towards safe-haven assets.
Oil prices surged almost 7% after retaliatory Iranian attacks disrupted shipping in the crucial Strait of Hormuz following the weekend's bombing by Israel and the United States that killed Iranian Supreme Leader Ayatollah Ali Khamenei. [O/R]
While British oil majors such as Shell rose 1.9% and defence companies like BAE Systems climbed 6%, other equity sectors, particularly banks and travel companies, came under heavy selling pressure as investors braced for travel and economic disruptions.
The blue-chip FTSE 100 closed down 1.2%, having touched a record high in the prior session, while the domestically oriented FTSE 250 index fell 1.4%.
"If the issues persist, then the market will start to worry about new inflationary pressures and that could lower expectations for near-term interest rate cuts," said Dan Coatsworth, head of markets at AJ Bell.
Banks including HSBC, Barclays and Lloyds Banking Group fell between 2.5% and 4.2%, as surging oil prices fuelled concerns about a resurgence of inflation and a potential dent to the economy.
British government bond yields rose as investors trimmed their expectations for Bank of England interest rate cuts. Traders were pricing in a 52% chance that the BoE will cut rates later this month, down from about 78% last week.
BoE policymaker Alan Taylor said that it was too soon to tell how the conflict in the Middle East would impact Britain's sluggish economy.
British Airways operator IAG fell 5.5% after the airline said on Saturday it had cancelled flights to Tel Aviv and Bahrain until March 3. The broader FTSE 350 travel & leisure index fell 4.3%, with hotels and cruise operators among the major decliners.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Harikrishnan Nair and Ros Russell)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- HSBC Upgrades Dollar General (DG) to Buy
- Five takeaways from Trump's summit with Xi in Washington
- Major airline group opposes US diesel export ban, warning it could hike prices
Create E-mail Alert Related Categories
ReutersRelated Entities
Barclays, HSBCSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
