UK equities came under sustained pressure, with the FTSE 100 falling sharply as escalating tensions in the Iran conflict drove a surge in energy prices.
The index dropped 1.2% on Wednesday to its lowest close of the month, as consumer-facing stocks led declines amid concerns over rising costs and weakening demand. Brent crude, the global oil benchmark, jumped as much as 5.5% to above $118 per barrel after Donald Trump intensified rhetoric around the Middle East situation.
Rate-sensitive and energy-exposed names were among the worst performers. Retailer Next plc, industrial property group Segro, and logistics developer Tritax Big Box REIT each fell around 3%, reflecting investor concern over higher borrowing costs and input prices.
Markets are also repricing the outlook for monetary policy. Traders have increased expectations that the Bank of England will raise interest rates at least twice more this year, taking the benchmark rate from 3.75% to around 4.25%, as inflation risks build.
Oil prices remain near their highest levels since the start of the conflict, supported by fears of prolonged disruption. Trump has signalled a harder stance toward Iran, including maintaining a naval blockade, fuelling concerns over an extended closure of the Strait of Hormuz—a vital corridor through which roughly one-fifth of global oil and gas supplies typically pass.
The combination of geopolitical risk, rising energy costs, and tightening monetary expectations continues to weigh heavily on UK equity markets.
