FTSE 100 FINISH LINE 2/3/26
FTSE 100 FINISH LINE 2/3/26
UK stock markets faced a sharp decline on Monday of circa 1%, swept up in a global selloff driven by escalating tensions in the Middle East that rattled financial markets. The intensifying military conflict in the region spurred a significant surge in oil prices and pushed investors toward safer assets. Oil prices soared nearly 8% after retaliatory Iranian strikes disrupted shipping through the critical Strait of Hormuz. These attacks followed weekend bombings by Israel and the United States, which reportedly led to the death of Iranian Supreme Leader Ayatollah Ali Khamenei. The impact was felt across multiple sectors. British oil giants like Shell saw their shares rise by 2%, while defense companies such as BAE Systems enjoyed a notable 4.9% gain. However, other industries suffered; banks and travel companies were hit hard as concerns over potential travel restrictions and broader economic repercussions weighed heavily on investor confidence.
As of Friday, the market-implied probability of a 25bp BoE rate cut on 19 March was 86%. However, a potential energy-driven inflation spike may push the MPC into a "trade-off" scenario, with inflation above target and output below potential. While the BoE's mandate focuses on a 2% CPI target, it must also consider economic stability. A significant, sustained oil price rise from the US-Iran conflict could shift forecasts, complicating decisions between rate cuts and inflation control. This may deepen divisions within the MPC, with doves emphasizing economic activity concerns and hawks wary of persistent inflation. Governor Bailey’s deciding vote will balance these risks. The final decision on 18 March remains uncertain, and the current 86% probability of a rate cut may not account for rising inflation risks.
In stock news shares of leading banks, including HSBC, Barclays, and Lloyds Banking Group, fell between 2.7% and 4.7% as surging oil prices stoked renewed fears of rising inflation. In the travel sector, British Airways’ parent company, IAG, saw its stock slide 5.8% after announcing over the weekend the suspension of flights to Tel Aviv and Bahrain until March 3. The FTSE 350 travel and leisure index also dropped 4.6%, with hotels and cruise operators among the most affected. Aerospace supplier Senior, which provides components to major manufacturers such as Boeing and Airbus, experienced a 3.7% decline in its shares despite reporting strong financial results.
TECHNICAL & TRADE VIEW - FTSE100
Daily VWAP Bearish
Weekly VWAP Bullish
Above 10750 Target 11000
Below 10650 Target 10550
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!