Finance
UK Stocks Plunge as Iran Conflict Sparks Global Selloff
Published by Global Banking & Finance Review®
Posted on March 2, 2026
2 min readLast updated: April 2, 2026
Add as preferred source on GoogleGlobal Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on March 2, 2026
2 min readLast updated: April 2, 2026
Add as preferred source on GoogleUK markets tumbled on March 2, 2026, as escalating Iran–Middle East conflict, surging oil prices (Brent up ~8–13%) and disrupted shipping through the Strait of Hormuz triggered global risk-off sentiment, buoying energy and defense names but pressuring banks, travel and domestic stocks.
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)
UK stock indexes fell due to escalating conflict in the Middle East, which spiked oil prices and prompted a global selloff.
Oil majors like Shell and defence companies such as BAE Systems saw share price increases during the selloff.
Travel stocks, including British Airways operator IAG, declined, with IAG falling 5.8% after flight cancellations.
Heavyweight banks like HSBC, Barclays, and Lloyds saw their shares drop between 2.7% and 4.7% amid inflation fears.
Expectations for a near-term interest rate cut by the Bank of England decreased from 78% to 74% due to inflation concerns.
Explore more articles in the Finance category