Middle East Conflict Sparks UK Market Turmoil

The UK's major stock indexes are poised for their steepest weekly decline in nearly a year. This follows growing tensions in the Middle East that have heightened fears of inflation, driven by escalating energy prices. By 1130 GMT, the blue-chip FTSE 100 had slipped 0.1%, while the FTSE 250 remained flat, both heading for their worst week since the April 2025 turmoil sparked by U.S. President Donald Trump's tariff announcement.

Shares of oil giants Shell and BP surged almost 2%, reflecting rising crude oil prices as conflicts restricted shipments through the strategic Strait of Hormuz. Qatar's energy minister has warned that Gulf countries could halt all energy exports within weeks, which he believes could push oil prices to $150 per barrel.

The spike in energy costs has led traders to sharply diminish expectations of an interest rate cut this year, with current odds of a 25-basis-point cut from the Bank of England this month dropping to 15% from 80% earlier. Despite a faster-than-expected rise in British house prices in February, the worsening geopolitical situation and inflation worries could delay any interest rate reductions, impacting sector outlooks.