- FTSE 100 down 296 points at 10,484
- Brent hits $83 amidst Iran fighting
- Miners down on Chinese copper stockpile fears
4.50pm: FTSE set back two weeks
The FTSE 100 just avoided losing 300 points on Tuesday, falling 2.75% to back below 10,500, though only setting the benchmark back to where it was two weeks ago.
London's mid-caps were similarly knocked lower, with the FTSE 250 index dropping 735 points or 3.1% to 22,688.75.
Precious metals and copper miners, airlines, housebuilders, real estate developers, banks, retailers and insurers were among the big blue-chip losers in London.
Intertek Group was the biggest faller, down 18% on the back of results that might not normally even have been called mixed.
Energy distributor DCC fell 6.3% as oil and gas supplies are disrupted, gold miner Endeavour dropped 6.15% as precious metals prices fell, housebuilder Persimmon and developer British Land slid 6% and 4.1% as BoE rate cut expectations were pushed back.
British Airways owner IAG fell 5.4%, down 18.5% since Thursday's close.
Next were Fresnillo, Metlen Energy & Metals, Rentokil Initial, HSBC Holdings, Kingfisher, British Land Co, Howden Joinery Group, JD Sports Fashion, Aviva, Standard Life, Legal & General Group, all down between 4% and 5.5%.
There were seven Footsie companies in green at the end of the day, led by Smith & Nephew, up 3.6% and BP, up 1.1%.
Shell fell 0.6% despite Brent crude rising another 6.5% to $82.8 a barrel.
Market analysts said shares were hit hard due to escalation in the Middle East worsening the global economic outlook, with comments from President Trump that the Iran war might not necessarily be over and done in a week as some were hoping.
UK and European natural gas futures surged another 40% to above €60/MWh and 136p a therm, highs that have only been touched a couple of times since early 2023, following a big jump yesterday too, due to fears over LNG supply.
Gold and silver prices have dropped around 4% and 8% respectively because of the stronger US dollar and rising inflation concerns.
4.17pm: Bad day for FTSE
Today is set to be one of the FTSE's worst sessions in years.
The last time the London index sank more than 300 points in a single session was on the back of Donald Trump's "Liberation Day" tariffs and the response from China in April last year.
Before that there were falls of around 300 points in 2023 due to banking worries, and fell over 2% on the back of the infamous Liz Truss mini-Budget of September 2022, then its worst drop since the onset of the Covid-19 pandemic.
3.38pm: Iran 'no longer just about oil' as Amazon data centres hit
The mood is different on Wall Street today, says market analyst Kenny Polcari at Slatestone, in part due to two Amazon Web Services data centres in the UAE damaged by Iran drone strikes.
AWS revealed the news overnight, with another facility in Bahrain affected by an attack nearby, as Iran retaliated to the strikes by the US and Israel.
"That is enough to shift the conversation," Polcari says, as it begs the question: "could data centers become targets?
"Because if they are, that’s a new level of escalation. We’re not talking about oil pipelines or shipping lanes anymore. We’re talking about digital infrastructure – the backbone of cloud services, financial systems, government networks, AI workloads, payment systems, logistics platforms – everything."
"If markets begin to believe those are vulnerable in conflict zones then so much more changes… risk premiums change. Insurance costs change. Redundancy planning changes. Capex shifts. Valuation multiples adjust – especially in tech.
"That’s why this morning feels heavier. This isn’t just about oil anymore."
2.52pm: Heavy selling of stocks in New York
Wall Street has opened sharply lower, with heavy selling across the board in early trade.
The Dow Jones is down 1,060 points or 2.2% at 47,843, while the Nasdaq has dropped 2.1% and the S&P 500 has fallen 2%. The small-cap Russell 2000 is off 2.8% just over 20 minutes into the session.
Biggest fallers on the Dow are Caterpillar, down 3.8%, Sherwin-Williams, down 3.4%, Goldman Sachs down 3% and UnitedHealth, down 2%.
On the Nasdaq 100, Western Digital, Micron, Ferrovial, Intel, DataDog, Seagate and ASML were all down over 5%, followed by Shopify, Applovin, ARM, Lam Research and others all down over 4%.
Nvidia, Alphabet, Amazon, Tesla and Broadcom are all down around 2%.
2.18pm: Reactions to OBR forecasts and Reeves speech
Some reactions to the spring statement.
Deutsche Bank economist Sanjay Raja says it was “largely a non-event” with “no big fireworks” and “no rabbits out of the Chancellor’s hat”.
Borrowing is now expected to track lower beyond 2026-27, with debt about £22 billion lower per year. But he warned higher inflation and weaker spending could leave the Chancellor with “£5 billion less in headroom” by the autumn.
Elliott Jordan-Doak at Pantheon Macroeconomics notes that the Chancellor has boosted her headroom again, but big fiscal questions remain unanswered in the non-Budget that markets expected.
Headroom was lifted to £23.6 billion, he says, but the changes are modest and “chunks of the fiscal forecasts now look dated” in due to the outbreak of the Iran war.
While the Chancellor was at pains to outline the stability dividend for the public finances in her speech, "we think the fiscal picture is more worrying than Ms. Reeves would care to admit", he adds.
"Granted, the Chancellor’s margin of headroom remains intact, providing some breathing space should the fiscal picture deteriorate. But the Government has shown little ability to stick to its plans, racking up a raft of policy U-turns during its first two years in office."
He expects more will follow, while also noting that the government "continues to provide few details of how it will meet its substantial spending commitments on defence and the climate transition. So, we think the risks remain towards higher borrowing than outlined in the current plans".
NIESR economist Fergus Jimenez-England says the OBR is being overly optimistic.
"The OBR expects the unemployment rate to rise to 5.3% this year, consistent with elevated labour costs continuing to dampen hiring appetite. It sees unemployment settling at 4.1% in the long run - this is markedly optimistic in our view and well below the consensus of academic economists.
"This flatters the fiscal outlook, by providing higher projected tax receipts and lower projected welfare spending."
1.46pm: Iran had enriched uranium but no nuclear warheads
The head of the International Atomic Energy Agency says it has not seen elements of "a systematic and structured program to manufacture nuclear weapons” in Iran.
However, the country had enriched uranium to 60%, Rafael Grossi told NBC, something that "only countries with nuclear weapons have".
This was the agency's main concern, with "no clear objective" for such supplies of enriched material, he said, which in theory could be "enough to produce more than 10 nuclear warheads. But do they have them? No."
1.09pm: OBR forecasts published
Rachel Reeves has finished her statement, which as promised was all about the OBR's updated forecasts (some of which might be moot if the Iran war lasts for long).
The Treasury has now published the forecasts on its website.
Soon we will get some reactions from the City, but it's had no effect on the FTSE 100.
The pound has recovered some of its losses against the dollar, down 0.6% now, but that was happening before the Chancellor began speaking.
12.56pm: Public deficit and debt update
After some political points scoring, the Chancellor moves on to sharing details of the OBR's debt forecasts.
Debt is set to be lower in every year of the forecast compared to the autumn's forecasts.
Reeves says the OBR forecasts a budget deficit of 4.3% of GDP this year, narrowing to 3.6% of GDP next year.
The watchdog puts headroom against the rule to lower net financial debt at £27.1 billion by 2029-30, up from £24 billion in November. Headroom against the current budget rule is £23.6 billion, compared with £21.7 billion previously.
The OBR sees public sector net borrowing at 2.9% of GDP in 2027-28, 2.5% in 2028-29 and 1.8% in 2029-30, each slightly lower than its November forecasts.
12.46pm: Growth forecasts tweaked
The OBR has updated its forecasts for UK economic growth, with average growth largely unchanged but inflation was expected to fall faster than it had been predicted in the autumn.
GDP to grow slower in 206 and now faster in 2027 and 2028.
GDP forecast to grow by 1.1% in 2026, down from 1.4% in November, before picking up to 1.6% in 2027 and 2028.
Growth in 2029 is forecast at 1.5%, unchanged from the previous estimate.
GDP per capita is expected to grow by 5.6% over the course of parliament.
GDP growth forecast down to just 1.1% this year. Up more in later years.
OBR says GDP per head to rise by 5.6% over this parliament. Not great - just about 1% a year, but better than last parliament!
— Paul Johnson (@PJTheEconomist) March 3, 2026
All aboard the rocket ship boys! https://t.co/c4A5yZOXzG
— Mike Bird (@Birdyword) March 3, 2026
12.39pm: Reeves to meet North Sea industry this week re Iran war and rising energy prices
Rachel Reeves is up and delivering the Spring Forecast statement, starting by highlighting the Iran conflict and the increase in defence spending she has overseen.
The "world has become more uncertain in the last few days", she says, "we need to secure the economy against shocks".
Alluding to the rise in energy prices, she says she will meet North Sea industry leaders tomorrow.
12.25pm: US investors taking the Iran war more seriously today
US futures are pointing to a sharp fall when trading starts in a couple of hours.
Wall Street equity investors looked more rattled ahead of today's session, with tech stocks set to take the brunt of selling, after shugging off the US and Israel's strikes on Iran at the start of the week.
Futures for the tech-heavy Nasdaq were down 2.1% ahead of Tuesday's open, with S&P 500 and Dow Jones futures both down around 1.7%.
Nvidia was down 2.7% in pre-market trading, while names like Micron and Seagate down over 4% and SanDisk 6.2% lower. Airlines were also heading for a fall, as flights to the region look set to be cancelled for the foreseeable.
11.55am: QatarEnergy pauses more production
Worth noting that Qatar's state-owned energy company has announced it is halting production on some downstream products including urea, polymers, methanol and aluminum.
The company previously announced that it had halted production of liquefied natural gas (LNG) after attacks on facilities in Ras Laffan and Mesaieed. QatarEnergy is one of the biggest producers of LNG in the world.
11.48am: Bank of England March rate cut hopes fading
Events in the Middle East are affecting the pound and predictions for Bank of England interest rates.
"The market is rapidly pricing out the chance of a rate cut this month," says Kathleen Brooks, head of research at XTB.
"Energy prices have been the main driver of UK inflation in recent years and the BoE will not want to lose control of price stability this year.
"Last week there was an 80% chance of a rate cut on 19th March, this now stands at just over 20%.
"The interest rate futures market has also rushed to price out a second rate cut from the BOE for 2026, with only one cut expected in late Q3."
The pound has dropped 0.9% versus the dollar to 1.3285, but the euro is similarly affected, down 0.8% at just below 1.16.
Dollar demand is up, with the dollar index (DXY) up almost 1% to 99.3, its highest since mid-January (which will not please President Trump). The pound is roughly flat against the euro, incidentally.
11.27am: Four FTSE names in green
There are just four London blue-chips in green at this moment: Smith & Nephew, rebounding 3.6% from yesterday's results-inspired drop, then Hikma Pharma up 1.2%, and Pearson and RELX less than 0.5%.
Shell is down 0.5% and BP is flat despite Brent crude having jumped 21% this month to over $84 a barrel, the highest since the summer of 2024.
Market analyst Susannah Streeter at Wealth Club says energy prices are continuing to mount "as Lebanon has been drawn into the conflict and Gulf states are still reeling from a barrage of Iranian strikes.
"Iran is retaliating to attacks from Israel and the US and is now threatening to set fire to ships using the crucial Strait of Hormuz.
"Given that it’s an essential route for around a fifth of global oil and gas supplies, this has sent energy prices even higher."
But the oil market is well placed to manage the impact from Iran, according to Bridget Payne, head of energy forecasting at Oxford Economics.
"The market is well supplied, and Iran is unlikely to sustain disruption that is both severe and prolonged, making a full-blown oil crisis unlikely,” she said in a new report.
The initial market reaction yesterday, where with Brent rose to around $80 before settling closer to $78, suggests markets are "pricing disruption, but not a prolonged closure that would trigger major shortages".
Payne says a "moderate disruption scenario" at the Strait of Hormuz is the firm’s baseline view, forecasting oil supply is disrupted by an average of four million barrels per day over the next quarter and expect Brent to average $79 per barrel in Q2, "before easing as supply resumes by the end of the quarter".
At the other end of the FTSE, Intetek is down 14% now despite the product testing and certification company reporting what seemed like a strong set of results, with a third consecutive year of double-digit earnings growth and upgraded outlook for one of its key divisions.
It was "mixed news", says market analyst Dan Coatsworth at AJ Bell, "with investors ignoring the better-than-expected earnings per share and strong margins to focus on a worse-than-expected organic revenue growth".
Looking ahead to the next few hours, Chancellor Rachel Reeves will deliver her "spring forecast" statement from around 12.30pm, with the Office for Budget Responsibility’s spring forecasts published at 1pm and a OBR press conference taking place at 2.30pm.
10.29am: Pain deepens
The FTSE 100 extended its losses sharply on Tuesday, falling more than 300 points as mounting concern over the escalating Middle East conflict and its implications for energy prices and inflation rattled investors across global markets.
Analysts said Asian markets had weakened on rising energy price anxiety, with US futures also turning more alarmed after Wall Street's initially sanguine response to the conflict on Monday.
The suspension of liquefied natural gas production in Qatar proved a particularly sensitive pressure point, sending gas prices surging globally and heightening fears of a renewed inflation spike.
Market experts warned that prolonged elevated oil and gas prices risked pushing interest rates higher, a prospect typically damaging for equity markets, and noted that higher energy bills could prompt consumers to rein in spending more broadly.
BP and Shell continued to benefit from the oil price surge, but their heavyweight status in the index was insufficient to offset heavy falls in miners and financial stocks.
Chancellor Rachel Reeves' Spring Statement, delivered on Tuesday afternoon, risked being overshadowed by events, though Coatsworth noted that calls had already emerged for action on fuel duty to help mitigate the impact of surging energy prices on consumers.
9.41am: Copper over-supply fears grow
FTSE 100 copper miners fell sharply in early trading on Tuesday after data showed Chinese smelters producing record quantities of the metal, threatening to weigh on prices at an already turbulent time for global markets.
Antofagasta, the Chilean copper miner, dropped 4% while Anglo American, the diversified miner with significant copper operations, fell 3.5%.
The declines followed a report citing a poll of producers by Shanghai Metals Market showing Chinese refined copper output expected to reach almost 1.2 million tons this month, a 4.6% increase from February and a record high for the survey.
Year-to-date output growth stands at 10%, with swelling stockpiles threatening to slow the metal's recent price gains at a time when copper had been benefiting from strong demand driven by the global energy transition and artificial intelligence infrastructure buildout.
The losses added to broader pressure on mining stocks, with the wider FTSE 100 falling 150 points to 10,630 as the escalating US-Israeli military campaign against Iran rattled investors and sent oil prices to their highest level in more than a year.
8.20am: Index tumbles 150 points as Middle East conflict deepens
The Footsie fell further than predicted on Tuesday, dropping 150 points to 10,630 as escalating conflict in the Middle East rattled investors and sent oil prices to their highest level in more than a year.
This comes on top of Monday's sharp decline, prompted by the US-Israeli military campaign against Iran, which stretched into a fourth day.
Brent crude, the international oil benchmark, broke through $80 per barrel for the first time since January 2025 after the Strait of Hormuz, through which roughly a fifth of the world's oil passes, was effectively stalled, and Saudi Arabia's largest refinery was temporarily shut following a drone strike.
Defence and energy stocks were among the few gainers, with sentiment towards BP and Shell strengthening sharply on the back of rising oil prices.
Derren Nathan, head of equity research at Hargreaves Lansdown, the investment platform, said the picture for both companies was complex.
He noted that while neither has production in Iran, BP's operations in Iraq and Abu Dhabi risk being bottlenecked by Strait of Hormuz disruption, and Shell faces similar exposure through its liquefied natural gas facilities in Qatar and the Emirates.
The analyst added that both companies' trading arms could benefit significantly from the volatility, with Shell's balance sheet strength leaving it better placed to weather a prolonged disruption.
US futures pointed lower after Wall Street ended Monday flat, with technology stocks outperforming as Nvidia, Palantir and Microsoft all gained, while consumer stocks fell on fears that surging commodity prices could reignite inflation.
Gold slipped slightly in early trading after closing more than 1% higher on Monday, with the precious metal hovering around $5,300 per ounce within reach of all-time highs, though expectations for Federal Reserve interest rate cuts are fading as inflationary pressures build.
Ahead of the open
The FTSE 100 is predicted to open 86 points lower on Tuesday as global markets reel from the escalating US-Israeli military campaign against Iran.
Stock markets across the Asia Pacific suffered steep losses, with South Korea's KOSPI, the region's best-performing index this year, plunging 7.2% in afternoon trading.
Japan's Nikkei 225 fell 3% and Australia's ASX 200 dropped 1.3%.
Airlines bore some of the heaviest losses, with Korean Air falling more than 9% and Japan Airlines sinking about 6% after carriers cancelled thousands of flights to the Middle East.
The sell-off came despite Wall Street holding firm overnight, with the benchmark S&P 500 closing flat and the tech-heavy Nasdaq edging up 0.36%.
Oil prices surged as much as 13% on Monday before easing, with Brent North Sea Crude up about 2.2% at 04:00 GMT amid fears that Iran could close the Strait of Hormuz, a critical shipping lane for global energy supplies.
European gas prices soared as much as 50% after QatarEnergy, the state-owned Qatari energy company, halted production following Iranian attacks in the region.
UK markets face an additional source of uncertainty today as Chancellor Rachel Reeves delivers her Spring Statement, which will include a new economic outlook but no formal fiscal update.
Analysts expect no significant changes to the government's fiscal position, though UK markets have shown particular sensitivity to political uncertainty in recent months.