- FTSE 100 down 241 points to 10,063
- Brent crude oil soars as Iran and Israel attack energy facilities
- Bank of England holds rates steady, says ready to act if needed
- UK unemployment rate stable last month, wage growth slowed
5.15pm: Big losses
Amid escalating conflict in the Middle East, global equities remained under pressure as oil prices jumped. The FTSE 100 closed down 241 points at 10,063.
4.11pm: Banks, housebuilders and miners dragging FTSE to hefty loss
London's blue chips are on course for a hefty loss of around 250 points today, though not quite as chunky as the 300-plus we saw a couple of hours ago.
The index has fallen over 370 points since midday yesterday, when attacks on energy infrastructure began, and saw the index flirt with the 10,000 mark that was passed in the first week of January.
This sent Brent crude prices soaring, while hawkish language from the Bank of England and ECB has given the market further willies.
Housebuilders, banks and miners are the worst hit sectors.
Worth noting: NatWest, Standard Chartered and M&G all went ex-dividend today, accounting for 4.1, 3.5 and 1.4 index points of their declines respectively — meaning much of the apparent sell-off is mechanical rather than a vote of no confidence from the market.
And miners, a key sector for the FTSE 100, have also been knocked, even gold miners.
“Precious metals are supposed to be havens in time of surging inflation," says IG analyst Chris Beauchamp, "but just as in 2022, this old cliché is proving to be dreadfully incorrect.
"Instead investors have done what they always do, buy the dollar, and both gold and silver have dropped accordingly. When under pressure, the liquidity available in the dollar and US Treasuries is far more attractive than any notional inflation hedge in precious metals."
3.23pm: ECB also turns more hawkish
European Central Bank president Christine Lagarde also made a "hawkish pivot" at the press conference following today’s meeting, which also saw policy left unchanged.
"Even if a rate hike is not imminent, the change in tone and language acknowledges more uncertainty and is meant to demonstrate the ECB’s willingness to act, if need be," says Carsten Brzeski, head of macro at ING.
Lagarde retrieved her well-known "monitor closely" or "closely monitoring" phrases back out from her briefcase.
This is, says Brzeski, "a clear signal" that the ECB has shifted to a higher alert stance.
"In the past, the term ‘monitor closely’ had always been a sign of high alertness; the time it was used was during the short-lived banking tensions in March 2023 and before in 2022.
"In the distant past, ‘monitor closely’ was followed by ‘vigilance’ in the run-up to rate hikes. Following the logic of institutional ECB language, today’s ‘closely monitoring’ combined with Lagarde’s statement that risks to the inflation outlook were tilted to the upside are both clear signals of increased alertness."
Brzeski says the press conference saw Lagarde keep things "vague", but "reading between the lines suggested that the ECB is once again making a distinction between a supply-side and a demand-side shock".
Lagarde "gave the impression that the ECB would only start to react with rate hikes if and when higher energy prices and headline inflation would start to be passed through".
"This is probably the most important lesson from the 2022 period: not that the ECB was too late to react to an energy price shock, but that it was too late to identify and to react to supply-driven inflation broadening to a fully-fledged and broad inflation problem."
All in all, he says a rate hike is "not yet on the table, but today's meeting clearly marks a hawkish pivot".
2.49pm: BoE is 'being prudent, don't get carried away'
A more hawkish statement from the Bank of England has "opened the floodgates for markets to price in more rate hikes", says James Smith, economist at ING.
Markets are pricing two rate hikes this year, while two-year rate expectations are now a full quarter-point higher than a few minutes before the MPC decision.
"Yet we shouldn’t get too carried away from what today’s decision tells us about future policy," Smith says.
"Yes, the Bank has opened the door to a hike – and crucially, so have some of the arch-doves. That is what markets are understandably latching onto.
"But importantly the Bank also concedes this is a very different economic environment to 2022. It doesn’t rule out this crisis fostering a greater need to lower rates further, either."
He urges the market not to read too much into the unanimous vote, and reckons the "same fault lines" seen last year will re-emerge, ie those that want rate cuts still are keen on them once inflation risks pass.
"Ultimately, the central message is that the Bank, like the rest of us, has no idea where the disruption ends. It’s only prudent to keep its options open and see where things land in April."
He says the scenario the Bank is worried about is energy prices staying at or above today’s levels for a prolonged period, in which case the BoE would be highly likely to hike.
It also depends on whether Rachel Reeves and the Treasury do anything to cushion consumers against rising energy bills.
If natural gas prices stay at current levels for some time, it is likely to result in the average household energy bill climbing above £2500, as in 2022, Smith says, though with borrowing costs considerably higher than four years ago, the Treasury’s ability to step in to provide support is much more constrained.
"Fundamentally, our view is that this crisis is more likely to manifest itself in higher unemployment than in significant second-round effects on inflation.
"Setting out a clear base case for the Bank in these volatile times is clearly difficult. But in a scenario where prices do settle a bit lower into Q2... then we think the bar to hike is probably higher than markets think. In that scenario, we suspect we’d be looking at a prolonged pause."
Berenberg's Andrew Wishart has a similar message.
"Beware of whiplash: The Bank of England’s (BoE’s) hawkish shift in tone does not mean an interest rate hike is next," he says, though he acknowledges that the bias towards rate cuts was reversed
With investors now pricing in at least two interest rate hikes this year, he says this will "immediately tighten financial conditions by raising the interest rates available on fixed-rate mortgages and corporate loans".
"In our view, this will help to ensure demand is too weak for a new price-wage spiral to form, and that the future direction of interest rates is down, not up."
2.22pm: Markets getting ahead of themselves, says Bailey
Bank of England governor Andrew Bailey has pushed back against market expectations of imminent rate rises on Thursday.
In his press conference, he suggested traders were "getting ahead of themselves" in pricing in hikes.
He said: “I would caution against reaching any strong conclusions about us raising interest rates."
And added, "today we’ve given a very clear message. The right place to be is on hold.”
1.53pm: Wall Street opens with small losses
US stocks have opened in the red, but losses are not as bad as in Europe.
The Nasdaq is the worst hit, down 0.7%, with the Dow and S&P both falling 0.5%, with losses already trimmed from initial levels.
This seems to be having an effect on the mood on this side of the Atlantic, with the FTSE also coming off its worst too, down 2.4% compared to around 3%.
1.12pm: FTSE down 300 points
A 300-point loss is on the books now for London's blue-chip index, which dipped below 10,000 momentarily, as the BoE's stance is seen as hawkish by many market watchers, darkening the mood.
The selling is broad-based, with fifteen FTSE 100 stocks down more than 5% and another 14 down over 4%.
Miners are taking the heaviest beating, with precious metals producers Fresnillo and Endeavour Mining sliding alongside copper-focused names Antofagasta, Anglo American and Rio Tinto, hit by a combination of falling metal prices and risk-off sentiment.
Banks are also deep in the red, with NatWest, Standard Chartered and Barclays all down sharply as investors fret about the impact of a global slowdown on loan books and credit quality.
Housebuilders Barratt Redrow and Persimmon are among the fallers too, as rising energy prices have knocked the Bank of England off its interest rate-cutting course and after today's statement, there are fears that rates could remain as they are all year.
Engineers Rolls-Royce, Weir Group and Melrose Industries are also caught in the selloff, while Marks & Spencer rounds out the list of 5% fallers as consumer-facing stocks come under pressure from the prospect of a renewed squeeze on household spending power.
"If anyone was in doubt as to how the BoE would respond to the current situation, then today is clear. A dramatic shift has taken place, and hikes are back on the table," says Chris Beauchamp, market analyst at IG.
As he adds, this was pretty much unthinkable just a few weeks ago, "but is a sign of how the war with Iran has upended everyone's forecasts".
12.51pm: Stock slump deepens as BoE adds to risk-off mood
The FTSE 100 is down almost 300 points, back to levels last seen at the start of the year.
Some more thoughts on the BoE statement.
It "makes sense given the enormous uncertainty enveloping the global economy in the wake of the escalating war in the Middle East", says Kallum Pickering at Peel Hunt.
"The 9-0 unanimous vote in favour of holding the Bank Rate is the most credible outcome possible given the extremely difficult backdrop – and reflects an honest appraisal of the situation the BoE faces, in our view.
"While rate-setters may still privately believe that the next rate move is more likely to be down than up, given the uncertainty over the Iran war timeline, advocating for such a move would have been unwise."
Thomas Pugh, chief economist at RSM UK, also notes the guidance has shifted away from the recent bias towards easing, "taking a more balanced view, recognising that the risks towards higher inflation have shifted materially higher, but so have the risks to growth"
Gven the uncertainty around energy prices, the committee "clearly wanted to keep its options open", and he says his prediction is that rates are on hold for the rest of the year.
"Looking ahead is virtually impossible. The fog of war is thick, and President Trump’s inherent unpredictability can radically change the outlook on a daily basis.
“But for the future rates outlook, a swift resolution that sees energy prices fall back sharply would keep at least one rate cut on the table this year, probably in the summer. However, attacks on energy infrastructure overnight, such as the bombing of Ras Laffan, make that outcome less likely. It will take time to repair and restart energy facilities, even if hostilities end quickly."
12.19pm: Hawkish tilt hits gilts and FTSE
The FTSE has fallen further, down over 250 points now, as UK government bond yields rose after the BoE decision.
Analyst Kathleen Brooks tweets that "there was a hawkish tilt" to the BoE statement, "sticking to the 2022 playbook".
She feels that the statement wil hike rates in the future, 2 hikes now expected. This is going to be a big hit to growth.
The pound is up 0.3% against the dollar and 0.1% versus the euro.
"Essentially, the BOE won’t be cutting again until this war is over," Brooks says. "De-escalation is necessary to stop tighter monetary policy. The US is attempting this now, but there’s a long way to go."
12.13pm: BoE statement
A unanimous vote from the Monetary Policy Committee has been a rarity in recent years, but 'wait and see' seemed the best approach as the timing of Iran war remains uncertain.
The statement from the MPC says: "The MPC is alert to the increased risk of domestic inflationary pressures through second-round effects in wage and price-setting, the risk of which will be greater the longer higher energy prices persist.
"The MPC is also assessing the implications for inflation of the weakening in economic activity that is likely to result from higher energy costs.
"The Committee will continue to monitor closely the situation in the Middle East and its impact on global energy supply and energy prices. It stands ready to act as necessary to ensure that CPI inflation remains on track to meet the 2% target in the medium term."
The immediate trigger to sit tight was the disruption to oil and gas supplies flowing through the Strait of Hormuz, which has almost ground to a halt following Iranian attacks on vessels attempting transit.
The MPC notes that volatility in oil and gas prices has "made the short-term outlook for inflation particularly uncertain", but what is certain is that recent increases in energy prices will delay the return of CPI inflation to the 2% target that had been expected at the time of its February report.
"The immediate effect would be through higher fuel prices. Based on energy prices as of close of business on 16 March, CPI inflation was now expected to be close to 3.5% in March, almost half a percentage point higher than expected in the February report."
The MPC said monetary policy could not influence global energy prices but would aim to ensure inflation returned sustainably to its 2% target.
It flagged risks that higher energy costs could embed inflationary pressures through wages and prices, but could equally weaken an already fragile economy and push unemployment higher.
12.02pm: BoE sits tight on rates
The Bank of England has held interest rates at 3.75%, with the monetary policy committee voting unanimously to sit tight as the Middle East conflict drives energy prices sharply higher and clouds the inflation outlook.
The Bank warned that CPI inflation – currently 3% – could rise to 3.5% by the third quarter, but said it was equally alert to the risk that higher energy costs would weaken an already fragile economy.
11.53am: Waiting for the BoE
It's coming up to the Bank of England decision, though no changes to interest rates are expected.
"It’s hard not to feel sympathy for the BoE", says market analyst Kathleen Brooks at XTB, ahead of today’s monetary policy committee meeting.
"Less than three weeks ago there was an 80% chance of a rate cut at this meeting, now there is a small chance of a hike. This 180-degree turn in rate cut expectations has nothing to do with the BOE or the UK economy, and everything to do with the Middle East conflict that is causing an historic energy price spike."
A hold on rates is expected, she says, with the BoE likely to "try to buy some time to see how the war plays out in the coming weeks and months".
She says "the risk is that central bankers, typically a conservative bunch, spook markets with bleak outlooks" but thinks that "there is a good chance that the BOE will want to stress the unique position that it finds itself in", with things "very different now compared to 2022" when Russia invaded Ukraine.
"Back then, the UK economy was strong, there was a post-covid boost, unemployment was at historically low levels, wages were rising rapidly and the consumer was happy to spend. The current energy price spike is happening when the UK economy is weak."
If the MPC does suggest that rate hikes could be coming, "this would be a major policy mistake in our view and would likely put the brakes on consumer spending and worsen the UK’s economic outlook", with 1.8 million UK mortgage holders expected to refinance in 2026 so "would be disastrous in an already weak economy".
The market impact could be "nuanced", says Brooks, depending on what the MPC says about the impact from an energy price spike on their inflation and monetary policy forecasts
Wathc the EUR/GBP more than the GBP/USD, she says, with the pound having outperformed the euro for the duration of the Gulf conflict so far.
The ECB is also meeting today, but are seen as biased towards a prolonged pause in rate cuts before this crisis, and less concerned about the growth outlook as the BoE.
11.46am: SSE and other clean energy stocks might benefit from Iran war
Looking for positives from war is something that investors and analysts often do.
Jefferies clean tech team reckon the Middle East conflict could prove a catalyst for Europe's energy transition, echoing the push toward renewables that followed Russia's invasion of Ukraine in 2022.
Europe's larger wind and solar base is already "cushioning" the impact of higher gas prices on wholesale electricity costs, which the analysts say is a sign of how much the continent's energy mix has shifted, with renewables rising from around 30% of EU power generation in 2019 to nearly 50% last year.
Analyst Constantin Hesse highlights renewable energy equipment makers and utilities as likely beneficiaries, naming FTSE 100-listed SSE as well as several European names such as Vestas, RWE, Engie and Nordex among preferred stocks.
Spain was cited as a leading example, with gas setting electricity prices in only around 15% of hours so far in 2026, compared with 89% in Italy, thanks to its rapid buildout of solar and wind capacity.
10.59am: Goldman sees energy crisis hitting UK growth by 0.5%
Goldman Sachs warned on Wednesday that the Middle East conflict could knock 0.5 percentage points off UK economic growth this year, push inflation higher, and delay Bank of England interest rate cuts until July at the earliest.
The bank raised its UK inflation forecast for the second half of 2026 by 0.5 percentage points, though it said the Ofgem energy price cap – which limits what suppliers can charge households – should soften the blow.
On interest rates, Goldman said there was a "low hurdle to delay cuts" but a "high bar to hike," given that unemployment is already rising and the starting point for monetary policy is already restrictive.
10.32am: Financial fallers
Some analysis of the falls for NatWest, M&G and Standard Chartered, which are contributing to the Footsie's almost 200-point plunge this morning.
For banks, the sell-off reflects the escalating Middle East conflict raising fears of a wider hit to global economic activity and a resulting deterioration in credit quality, increasing the perceived risk on lenders' loan books.
Asset and wealth managers face a more mechanical problem: falling equity markets directly reduce assets under management, and with them the fee income that drives revenues.
M&G and its peers tend to be sold alongside banks on days when UK indices decline sharply, even though the underlying pressures differ.
Life insurers are less directly exposed to short-term equity swings, but sustained market weakness raises questions about capital buffers and the volume of new business being written, which is enough to push their shares lower on risk-off days.
9.50am: Trump calls for Israel and Iran to stop attacking gas facilities
Brent crude topped $118 a barrel this morning but has seen the peak pared back to $114 now.
President's Trump's efforts to calm energy markets do not seem to be working.
Yesterday, to try and reduce energy freight costs, he temporarily lifted the Jones Act shipping law for 60 days, temporarily allowing foreign-flagged vessels to move fuel, fertiliser and other goods between US ports.
And last night he posted on social media after Israel hit the massive South Pars gas field in Iran.
"The United States knew nothing about this particular attack, and the country of Qatar was in no way, shape, or form, involved with it, nor did it have any idea that it was going to happen," he wrote.
"Unfortunately, Iran did not know this, or any of the pertinent facts pertaining to the South Pars attack, and unjustifiably and unfairly attacked a portion of Qatar’s LNG Gas facility.
"NO MORE ATTACKS WILL BE MADE BY ISRAEL pertaining to this extremely important and valuable South Pars Field unless Iran unwisely decides to attack a very innocent, in this case, Qatar."
He threatened that if Qatar LNG facilities are attacked again, the US "will massively blow up the entirety of the South Pars Gas Field at an amount of strength and power that Iran has never seen or witnessed before. I do not want to authorize this level of violence and destruction because of the long term implications that it will have on the future of Iran".
9.19am: FTSE falling further, mainland European stocks too
The FTSE 100 has fallen 177 points to 10,128.62 in just over an hour and a quarter, led by miners, banks, airlines and engineers.
While the London index is down 1.7%, Germany's DAX is down over 2%, while benchmartks in Paris, Milan and Madrid are down 1.5-1.9%.
The Euro Stoxx index is down 1.7%, with losses across various sectors, including property, hotels and miners.
“The oil price remains in the driving seat," says market analyst Richard Hunter at Interactive Investor, adding that it is depressing risk sentiment across equities.
"The main unknown and therefore the largest concern for investors has been the duration of the conflict.
"The longer it progresses, so the chances of higher inflation and crimped economic growth become elevated.
"At the current time, the conflict appears to be escalating rather than abating, with the rhetoric from both sides threatening further military strikes.
"With this backdrop in mind, central banks have had little option but to adopt a wait and see approach. Any inflationary impact from the conflict is not yet feeding through to economic data, and the Bank of Japan and Bank of Canada joined the Federal Reserve in leaving interest rates unchanged, with the Bank of England and ECB expected to follow suit later."
On the UK unemployment data earlier, he says, "what would normally have been a mildly positive release was also caught in the crosshairs of the conflict", as wage inflation slowed.
"However, even at the lower level prices are well above the Bank of England’s target, let alone any inflationary pressure to come over the following months, almost certainly leaving the central bank no option but to sit on its hands for the time being.”
8.36am: Oil producers climb
There are only three FTSE 100 names in the green now, BP, up 2% on the back of the soaring oil price and a deal to sell its Gelsenkirchen refinery. (Shell is down 0.4%.)
Diploma, up 0.25% as it continues to attract buyers after yesterday's strong update.
And Rightmove, which is only marginally above flat.
There are more on the FTSE 250, including Ithaca Energy and Harbour Energy, up 8.7% and 4.2%.
IG Group has jumped 5.7% after its results, where the company announced a strategic review and announced a £125 million buyback.
8.15am: FTSE plunges over 120 points at open
The FTSE 100 has dropped 128 points to 10,177 in the opening few minutes of trading.
There are 91 companies in the red, led by financials and miners.
Precious metals miners Fresnillo and Endeavour Mining are among the bigger fallers, both down around 5% as the gold and silver prices continue to retreat.
With the copper price also sliding, Antofagasta, Anglo American and Rio Tinto are down too.
M&G, NatWest and Standard Chartered are also off.
8am: DFS profits plumped up in H1 but footfall has slowed
DFS Furniture has posted interims showing profits more than doubled as it continued to plump up its margins, but the retailer says footfall has softened in the second half.
Underlying pre-tax profit rose 81% to £30.9 million compared to a year earlier, as revenue climbed 8.6% to £547.7 million.
Chief executive Tim Stacey said the results were "reflective of our strengthening business," though he noted that footfall had softened since the half year, which was linked to bad weather and "delicately balanced" consumer confidence.
7.39am: IG launches shake-up alongside record results
IG Group has launched a strategic review alongside its results for 2025 where revenue and underlying profits came in higher than expected.
Chief executive Breon Corcoran hailed the record financial results and accelerating customer growth, and said the strategic review was "to ensure IG captures the full long-term opportunity ahead - evaluating routes to maximise shareholder value".
It will examine whether to change where the group is listed, potential acquisitions and possible mergers of parts of the business.
Results of the review are expected in the autumn.
7.22am: Natural gas prices spike to 2023 highs
Broader energy prices are spiking too, not just crude oil.
Natural gas prices in Europe are ramping up sharply this morning, after Iran launched attacks on key energy infrastructure across the Middle East.
TTF European natural gas futures soared about 25% to above €68 per MWh, reaching their highest levels in over three years.
Likewise, UK nat gas leapt to 170p per therm, also the highest since 2023 (see chart), but still some way from the sky-high levels seen in 2022.
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7.16am: FTSE 100 called over 100 points lower as oil soars
The FTSE 100 is expected to nosedive more than 100 points on Thursday morning as oil prices continue to soar on Iran's threats of retaliation against its neighbours, making the Bank of England meeting later almost a non-event.
It would extend the London index's rapid decline since midday yesterday, which led to a loss of 98 points by close, finishing at 10,305.29.
US stocks slumped overnight too, with the Dow Jones losing 768 points or 1.6%, the S&P 500 dropping 1.4% and the Nasdaq 1.5%.
The Federal Reserve kept its calm, keeping interest rates unchanged as expected, with 'dot plot' forecasts pointing to one rate cut this year as inflation expectations were revised higher.
Chair Jerome Powell said that it is "too soon" to assess the impact of higher oil prices and that "no one knows" what the impact will be.
This morning, Brent crude stands at $114.77 a barrel, up 6.7% afrter cllimbing from $102 to $109 yesterday.
"The relief in oil markets on news that Iraq would resume exports via Turkey didn’t last long," says market analyst Ipek Ozkardeskaya at Swissquote.
"News that another important Iranian official has been killed and Iranian energy facilities attacked turned the market upside down, as Iran threatened the Gulf countries with fierce retaliation, highlighting that their energy facilities have now become ‘a legitimate target’."
The latest on Thursday was that Qatar reported extensive damage to one of the world’s largest LNG export plants, while Kuwait said a drone attack had caused a fire at one of the biggest refineries in the Middle East.
Reports said a ship was burning off the coast of the UAE and another was damaged offshore Qatar.
Also UK unemployment remained steady at 5.2%, the ONS has revealed, with wage inflation slowing to 3.8% from the previous 4.2%.