Tuesday, March 3

London stocks at two-week low as Middle East crisis continues to impact oil and gas prices


The FTSE 100 (^FTSE) and European stocks headed lower again on Tuesday as the conflict between Iran and the US and Israel continued.

Oil and gas prices also held on to recent gains after an Iranian official said over night that his country would “set fire to anyone who tries to pass through” the Strait of Hormuz.

Ebrahim Jabbari, an adviser to the commander-in-chief of Iran’s Islamic Revolutionary Guard Corps (IRGC), told state TV that said ships “should not come to this region. They will certainly face a serious response from us.”

Brent crude (BZ=F) prices increased by 3.7% to $80.61 a barrel, at the time of writing, while the price of liquid natural gas surged by 30% on the back of the comments.

Around 20% of the world’s oil and gas passing through the Strait of Hormuz, but has come to a halt after several vessels were attacked in recent days.

The European Central Bank’s chief economist has warned that a prolonged war in the Middle East, and a persistent fall in oil and gas supplies from the region, could cause a “substantial spike” in inflation.

Philip Lane told the Financial Times said that “directionally, a jump in energy prices puts upward pressure on inflation, especially in the near term”.

He added that the impact would depend “on the breadth and duration of the conflict” and “would be amplified if it also gave rise to a repricing of risk in financial markets”.

The Middle East crisis has overshadowed chancellor Rachel Reeves’s preparations to update the nation on the health of Britain’s finances later on Tuesday in her spring statement.

  • London’s benchmark index (^FTSE) was 1.8% lower in early trade – its lowest level in almost two weeks

  • Germany’s DAX (^GDAXI) dipped 2.2% and the CAC (^FCHI) in Paris headed 1.7% into the red

  • The pan-European STOXX 600 (^STOXX) slumped 2%

  • Wall Street is likewise set for a negative start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the red.

  • The pound was 0.7% down against the US dollar (GBPUSD=X) at 1.3310

Follow along for live updates throughout the day:

LIVE 3 updates

  • Rachel Reeves to deliver spring statement

    Rachel Reeves will tell MPs on Tuesday that the government has the “right economic plan for our country” as she delivers her spring statement against a backdrop of weaker growth forecasts and persistent global uncertainty.

    The chancellor is expected to argue that the UK economy is “stronger and more secure” as a result of decisions already taken by ministers, pointing to easing inflation and lower borrowing costs as evidence that household pressures are beginning to abate.

    Speaking in the Commons around noon on Tuesday, Reeves will say:

    Her remarks come weeks after the Bank of England cut its UK growth forecasts. In early February, the BoE downgraded its projection for gross domestic product growth in 2026 to 0.9% from 1.2%, and to 1.5% from 1.6% in 2027, underscoring the fragile outlook facing the government.

    Ministers have sought to play down expectations for the spring statement, insisting it will not contain new tax or spending measures. The government has committed to holding a single annual fiscal event, the autumn budget, at which major policy decisions on tax and spending will be set out.

    Instead, the spring statement will focus on responding to the Office for Budget Responsibility’s (OBR) latest economic and fiscal forecasts.

  • Asia and US overnight

    Stocks in Asia were slumped overnight, as the Iran war continued to threaten energy supplies. The Nikkei (^N225) tumbled 3.1% on the day in Japan, with fears that the country could be hit by the lack of access to the Strait of Hormuz, while the Hang Seng (^HSI) fell 1.1% in Hong Kong.

    The Shanghai Composite (000001.SS) was 1.4% down by the end of the session, and in South Korea, the Kospi (^KS11) nosedived 7.2% on the day as markets reopened after a holiday on Monday.

    Across the pond on Wall Street, the S&P 500 (^GSPC) ended flat, recovering from early losses on Monday as rises in defence, energy and tech stocks offset drops in other sectors.

    The tech-heavy Nasdaq (^IXIC) was 0.4% higher and the Dow Jones (^DJI) lost 0.2%.

  • Coming up

    Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what’s moving markets, and happening across the global economy.

    Looking to the day ahead, we will get US February total vehicle sales, France’s January budget balance, Eurozone February CPI and Italy CPI.

    Central bank speakers include the Fed’s Williams and Kashkari, and the ECB’s Kocher and Sleijpen. Notable earnings include CrowdStrike, Thales and Target.

    Here’s a snapshot of what’s on the agenda for today:

    • 7am: Trading updates: Fresnillo, Inchcape, Man Group, IWG, Greggs, Travis Perkins, Keller, Johnson Service, XP Power and Reach, Keir

    • 8am: Worldpanel supermarket inflation and sales figures

    • 9.30am: ONS data: Mergers and Acquisitions involving UK companies: October to December 2025

    • 10am: Flash estimate of eurozone inflation in February

    • 12.30pm: Spring Statement from chancellor Rachel Reeves

    • 1pm: Office for Budget Responsibility’s (OBR) spring forecasts published

    • 2.30pm: Office for Budget Responsibility press conference

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