Finance
UK stocks fall as Middle East conflict hits risk appetite
Published by Global Banking & Finance Review®
Posted on June 17, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 17, 2025
2 min readLast updated: January 23, 2026
UK stocks declined as Middle East tensions affected investor sentiment. The FTSE 100 closed 0.4% lower with significant losses in banking and travel sectors.
(Reuters) -British equities ended lower in a broad-based selloff on Tuesday, with hostilities between Iran and Israel weighing on market sentiment and focus on a slate of rate decisions from central banks including the Bank of England this week.
The blue-chip FTSE 100 index closed 0.4% lower, with more than 70% of its components clocking losses - though the index was still just a whisker away from its all-time highs.
As the Israel-Iran conflict entered its fifth day, U.S. President Donald Trump indicated he may send senior American officials to meet with the Islamic Republic.
Trump also left early from the Group of Seven summit in Canada, where he signed a trade deal with British Prime Minister Keir Starmer.
Heavyweight banks bore the brunt of the selling pressure, with top lenders HSBC, Standard Chartered and Barclays each down more than 1%.
Travel and leisure stocks also saw heavy selling with airline operators Wizz Air and British Airways owner IAG down 7.5% and 4.4%, respectively.
Heavyweight energy gained 1.5% with oil prices ticking higher due to tensions in the Middle East. BP and Shell added more than 1% each as the top gainers on the blue-chip.
Looking ahead, the spotlight this week will be on central bank meetings, with the Bank of England set to meet on Thursday and the U.S. Federal Reserve's verdict on Wednesday. Both are expected to keep rates steady.
"The key takeaway from Thursday won't be the rate decision, but rather what clues the tenor of the accompanying statement gives as to when rates might be cut again," Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, said.
"The next meeting concludes on 7th August; assuming anticipated trends in inflation, wages and economic activity remain on track, a further 0.25% cut will be very much on the cards."
British midcaps fell 0.2%. A stand-out was construction company Morgan Sindall which jumped 14.6% after saying it expects annual pre-tax profit to be significantly ahead of previous expectations.
(Reporting by Andrew Heavens)
The decline in UK stocks was primarily due to hostilities between Iran and Israel, which negatively impacted market sentiment.
Heavyweight banks and travel and leisure stocks experienced significant losses, with major banks like HSBC and Barclays down more than 1%.
The upcoming central bank meetings, particularly from the Bank of England and the U.S. Federal Reserve, are expected to focus on rate decisions and economic outlook.
Energy stocks gained 1.5%, with companies like BP and Shell seeing increases due to rising oil prices linked to tensions in the Middle East.
Morgan Sindall stood out by jumping 14.6% after announcing it expects annual pre-tax profit to exceed previous expectations.
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