Source: Sharecast
The Footsie closed down 145.17 points (-1.44%) at 9,918.33, its lowest finish since 29 December, with losses of between 1.2% and 2.0% seen across most major indices in Europe.
Axel Rudolph, senior technical analyst at IG, noted the prospect of tighter monetary policy had hammered stocks and sent bond yields higher, as investors assessed how elevated energy prices would impact inflation.
"US Treasury yields climbed to their highest level since mid-2025, with investors increasingly pricing in a more hawkish Federal Reserve amid concerns that the conflict could sustain inflationary pressures. In the UK 10-year Gilt yields hit 5%, a level last seen during the 2008 financial crisis," he said.
Brent crude erased earlier losses to jump another 1.2% to $109.92 a barrel. Prices had initially eased after Israel said it would not attack Iran's major gas field and prime minister Benjamin Netanyahu stated that the war would end sooner than people think, even though he also alluded to a ground component.
However, late-afternoon reports suggested that the US military was deploying thousands of additional marines and sailors to the Middle East, heightening fears of an escalation of the conflict with Iran. Several media outlets reported that the amphibious assault ship USS Boxer, with the 11th Marine Expeditionary Unit aboard, was leaving the US about three weeks ahead of schedule.
On home shores, figures from the Office for National Statistics showed the government borrowed more than expected in February. Borrowing rose to £14.3bn, up £2.2bn from a year earlier and marking the second highest level for that month since records began. It was also well above the £8.5bn expected by economists.
Investors were also mulling the latest survey from the Confederation of British Industry, which showed that manufacturing output across the UK is expected to stabilise over the coming three months, following a fall in activity over the first quarter.
Smiths Group tumbles on outlook; Unilever gains
Smiths Group tumbled 9% despite a "solid" first-half performance, after the engineer’s outlook underwhelmed. Smiths also announced plans to return a further £1.5bn to shareholders through a special dividend and share buyback throughout 2027. However, the group now expects organic revenue growth to ease slightly this year.
Unilever edged higher as after confirming it had received an offer from US spice maker McCormick for its food business, which owns the Hellman’s, Bovril and Marmite brands. If successful, the deal would see brands such as Unilever's Hellmann's mayonnaise and US-based McCormick's Cholula hot sauce brought together.
Chilean copper miner Antofagasta was lower after being downgraded to ‘underperform’ from ‘sector perform’ by RBC Capital Markets, which slashed its price target to 2,800p from 3,600p.
On the FTSE 250, Spire Healthcare rose 7% following a report that private equity firm Bridgepoint is drawing up proposals for a formal offer worth £1bn, while JD Wetherspoons dropped 11% as it posted a steep drop in interim profits and warned that full-year numbers would likely disappoint.