Stock markets rocked by Trump’s Iran ultimatum, as UK economy faces growth hit

Asia-Pacific markets hit by Iran ultimatum

Donald Trump’s threat to ‘obliterate’ Iran’s power plants unless the strait of Hormuz reopens is hitting global stock markets today.

A wave of selling is sweeping through Asia-Pacific markets at the start of the week. Japan’s Nikkei has dropped by 3.4% in afternoon trading, China’s CSI 300 has lost 2.8%, and South Korea’s KOSPI index has slumped by 6.5%.

Trump’s ultimatum, and Tehran’s threat to “irreversibly destroy” essential infrastructure across the Middle East in response, means the war is entering a new phase of escalation, analysts warn.

Markets are finally starting to wake up to the gravity of the potential for long-term impact on energy markets, reports Neil Wilson, investor strategist at Saxo UK.

This is an escalatory doom loop – or ‘escalation trap’ with currently no realistic off-ramp. Neither side has an incentive to back down as the costs of doing so are increasing day by day. Each side thinks pushing harder will force the other to back down.

As well as fears of escalation in the conflict, investors are also bracing for rises in interest rates this year, with central banks under pressure to fight a rise in inflation.

Chris Beauchamp, chief analyst at IG, says:

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“Investors who have spent the weekend watching fresh strikes in the Middle East are now waiting to see what will happen when Trump’s 48 hour deadline expires tonight. But they are in no mood to hang around, and have continued to sell stocks and precious metals.

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Each day that the war goes does more damage to the global economy and drives inflation higher, with recession chances rising by the hour.”

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The stock market sell-off that began in Asia-Pacific markets overnight has spread to Europe.

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The main indices are all down sharply at the start of trading:

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UK’s FTSE 100: – 1.5%

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Germany’s DAX: -1.9%

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France’s CACX 40: -1.5%

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Spain’s IBEX: -1.8%

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Traders are responding to a weekend of heightened military action and rhetoric in the Middle East, says Derren Nathan, head of equity research at Hargreaves Lansdown:

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The US President has given Tehran until the end of today to reopen the Strait of Hormuz or risk strikes on the country’s power generation facilities. So far, there have been no signs of Tehran backing down, but international diplomatic efforts, including a late-night Sunday call between Donald Trump and Sir Keir Starmer, have intensified in an attempt to avoid further escalation.

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Newsflash: the UK’s blue-chip share index has dropped into correction territory, as fears over the Middle East crisis hit share in London.

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The FTSE 100 index has dropped by 154 points at the start of trading, a loss of 1.5%, to 9764 points.

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That means it has dropped by more than 11% from its record high set on 27 February, just before the Iranian war began.

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A fall of 10% or more is classed as a correction.

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Almost every share on the FTSE 100 is down, led by precious metal miners Endeavour Mining (-5%) and Fresnillo (-4.9%).

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Rolls-Royce (-4.4%) which makes and services jet engines, and British Airways parent company IAG (-3.2%), are also among the top fallers.

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Bloomberg has spotted that two Indian-flagged vessels carrying liquefied petroleum gas are making their way through the Strait of Hormuz, taking a route close to the Iranian coastline.

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They reportt:

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The Jag Vasant and the Pine Gas, two India-flagged very large gas carriers flagged to India, traveled northwards from the UAE coast toward Iran’s Qeshm and Larak islands early Monday, ship-tracking data show.

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The two supertankers were signaling Indian ownership instead of a destination, but are likely to be heading to India, which has been facing acute shortages of LPG, used as cooking gas. The pair follow two other Indian-flagged LPG vessels that made the transit earlier this month.

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And here they are:

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Wholesale gas prices in Europe have jumped in early trading.

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The UK month-ahead gas prices is up 3.1% at 155p per therm, nearly double their levels before the Iran conflict began.

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That’s still below below the 180p hit last week, after Israel attacked Iranian South Pars gas field.

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The Dutch front-month gas contract is up 3.7% to €61.45 per megawatt hour.

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The global energy crisis caused by the war in Iran is equivalent to the combined force of the twin oil shocks of the 1970s and the fallout of Russia’s invasion of Ukraine, the head of the International Energy Agency has warned.

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Fatih Birol, the IEA’s executive director, said the growing fallout could be seriously compounded through interuptions to the “vital arteries of the global economy”, including petrochemicals, fertilisers, sulfur and helium.

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Speaking at the National Press Club of Australia in Canberra on Monday, Birol said the depth of the problems in energy markets caused by American and Israeli bombings in Iran, and the closure of the strategic strait of Hormuz, had not initally been properly understood by world leaders.

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The US dollar is rising today, as investors seek out a safe haven.

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With risk appetite curbed by the escalating retaliatory threats in the Middle East conflict, the dollar’s reputation as a safe-haven asset meant it’s in demand.

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The dollar index, which measures the greenback against a basket of currencies, is up 0.2%, while the pound has lost half a cent to $1.329.

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The gold price is sliding fast today too.

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Spot gold has dropped by 4.6% today to $4,280 an ounce, hitting a nearly four-month low.

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Gold is suffering from rising expectations of higher global interest rates, traders say.

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Tim Waterer, chief market analyst at KCM Trade, explained:

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“With the Iranian conflict into its fourth week, and oil prices hanging around the $100 level, expectations have pivoted from rate cuts to potential rate hikes, which have tarnished gold’s appeal from a yield point of view.”

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Donald Trump’s threat to ‘obliterate’ Iran’s power plants unless the strait of Hormuz reopens is hitting global stock markets today.

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Markets are finally starting to wake up to the gravity of the potential for long-term impact on energy markets, reports Neil Wilson, investor strategist at Saxo UK.

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This is an escalatory doom loop – or ‘escalation trap’ with currently no realistic off-ramp. Neither side has an incentive to back down as the costs of doing so are increasing day by day. Each side thinks pushing harder will force the other to back down.

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As well as fears of escalation in the conflict, investors are also bracing for rises in interest rates this year, with central banks under pressure to fight a rise in inflation.

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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

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Growth across the UK economy is expected to almost halve this year, as the Iran war drives up energy prices.

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New forecasts from KPMG this morning show that UK GDP is only expected to increase by 0.7% in 2026, down from 1.5% in 2025. Back in December, KPMG had forecast growth would slow by less, to 1% this year.

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The energy price shock rippling through the UK economy will push up inflation, weigh on spending and delay interest rate cuts, they predict.

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KPMG also forecast a slowdown in investment, and. a rise in the unemployment rate – to 5.3% this year and next, up from 4.8% in 2025.

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Yael Selfin, chief economist at KPMG UK, said:

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“The outlook for growth in 2026 has taken a hit from the impact of higher energy prices, a cooling labour market and weak household spending.

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“The weaker growth outlook coupled with growing cost pressures will likely see firms scale back any investment plans over the coming year. Consumers could also cut back on discretionary spending to offset the squeeze from higher prices.

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“With inflation likely to re-accelerate from this summer, the Bank of England will be reluctant to move quickly on rates, meaning households and businesses will face higher borrowing costs for longer, even as the economy slows.”

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With fears of a new cost of living crisis growing, Andrew Bailey, the Bank of England governor, is due to meet Keir Starmer and senior ministers later today.

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The TUC are calling for an emergency taskforce that would bring employers, unions and the government together to help protect the UK from the economic fallout of the US-Iranian conflict.

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The agenda

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12.30pm GMT: Chicago Fed National Activity Index for February

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3pm GMT: EU Consumer Confidence Flash for March

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IG: recession chances rising by the hour

Chris Beauchamp, chief analyst at IG, says:

“Investors who have spent the weekend watching fresh strikes in the Middle East are now waiting to see what will happen when Trump’s 48 hour deadline expires tonight. But they are in no mood to hang around, and have continued to sell stocks and precious metals.

Each day that the war goes does more damage to the global economy and drives inflation higher, with recession chances rising by the hour.”

European stock markets join the sell-off

The stock market sell-off that began in Asia-Pacific markets overnight has spread to Europe.

The main indices are all down sharply at the start of trading:

UK’s FTSE 100: – 1.5%
Germany’s DAX: -1.9%
France’s CACX 40: -1.5%
Spain’s IBEX: -1.8%

Traders are responding to a weekend of heightened military action and rhetoric in the Middle East, says Derren Nathan, head of equity research at Hargreaves Lansdown:

The US President has given Tehran until the end of today to reopen the Strait of Hormuz or risk strikes on the country’s power generation facilities. So far, there have been no signs of Tehran backing down, but international diplomatic efforts, including a late-night Sunday call between Donald Trump and Sir Keir Starmer, have intensified in an attempt to avoid further escalation.

FTSE 100 falls in correction territory

The offices of London Stock Exchange Group Plc, right, in Paternoster Square in the City of London. Photograph: Bloomberg/Getty Images

Newsflash: the UK’s blue-chip share index has dropped into correction territory, as fears over the Middle East crisis hit share in London.

The FTSE 100 index has dropped by 154 points at the start of trading, a loss of 1.5%, to 9764 points.

That means it has dropped by more than 11% from its record high set on 27 February, just before the Iranian war began.

A fall of 10% or more is classed as a correction.

Almost every share on the FTSE 100 is down, led by precious metal miners Endeavour Mining (-5%) and Fresnillo (-4.9%).

Rolls-Royce (-4.4%) which makes and services jet engines, and British Airways parent company IAG (-3.2%), are also among the top fallers.

Fears that the spike in energy prices will hurt economic growth are weighing on metal prices today.

Copper has fallen to a over three-month low this morning; the benchmark three-month copper contract on the London Metal Exchange has fallen by more than 1.5% to $11,742 a ton, its lowest since December.

Gold is continuing to tumble – it’s now down by more than 6% at $4,218 an ounce.

Quite a reversal, given it hit almost $5,600 an ounce in late January.

Kathleen Brooks, research director at XTB, says:

Last week, the gold price lost the $5,000 handle, this week the $4,000 handle looks like it is at risk. This means another bruising day could be on the cards for UK equities, after heavy losses for the UK-listed gold miners last week, Antofagasta and Fresnillo both saw their stock prices drop 10%. Aside from oil majors and a trickle of well-received corporate news, there are few hiding places for stock investors at this stage of the conflict.

BBG: Two Indian LPG carriers in transit through strait of Hormuz

Bloomberg has spotted that two Indian-flagged vessels carrying liquefied petroleum gas are making their way through the Strait of Hormuz, taking a route close to the Iranian coastline.

They reportt:

The Jag Vasant and the Pine Gas, two India-flagged very large gas carriers flagged to India, traveled northwards from the UAE coast toward Iran’s Qeshm and Larak islands early Monday, ship-tracking data show.

The two supertankers were signaling Indian ownership instead of a destination, but are likely to be heading to India, which has been facing acute shortages of LPG, used as cooking gas. The pair follow two other Indian-flagged LPG vessels that made the transit earlier this month.

And here they are:

A map showing vessel movements in the strait of Hormuz Photograph: LSEG

Gas prices up

Wholesale gas prices in Europe have jumped in early trading.

The UK month-ahead gas prices is up 3.1% at 155p per therm, nearly double their levels before the Iran conflict began.

That’s still below below the 180p hit last week, after Israel attacked Iranian South Pars gas field.

The Dutch front-month gas contract is up 3.7% to €61.45 per megawatt hour.

US crude oil futures are rising this morning, up more than $3 to $101.26 per barrel.

European stock markets are expected to fall when trading begins in half a hour’s time.

The futures contract for the UK’s FTSE 100 share index is down over 1% this morning. Last Friday it dropped below 10,000 points, meaning it has lost all its gains for 2026.

🚨 UK markets set for a rough open. FTSE 100 futures down ~1.2% (117 pts), hitting correction territory.
📉 Main drivers:
• Escalating Middle East tensions & Hormuz blockade fears 🛢️
• Brent Crude spiking to $113
• Global shift to safe havens
A volatile morning ahead.

— Mike Ridyard (@RidyardMike) March 23, 2026

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🚨 UK markets set for a rough open. FTSE 100 futures down ~1.2% (117 pts), hitting correction territory.

📉 Main drivers:

• Escalating Middle East tensions & Hormuz blockade fears 🛢️

• Brent Crude spiking to $113

• Global shift to safe havens

A volatile morning ahead.

— Mike Ridyard (@RidyardMike) March 23, 2026

The chief executive of Saudi Aramco, the world’s biggest energy company, is reported to have withdrawn from a major energy conference in Houston, as the situation in the Middle East threatens to escalate further.

The oil is relatively calm this morning, so far anyway.

Brent crude is up 1.2% at $113.34 a barrel, some way below the record highs of nearly $120/barrel seen earlier this month.

Ipek Ozkardeskaya, senior analyst at Swissquote, says:

Oil prices are higher this morning as risks build that regional energy infrastructure could suffer further damage, potentially triggering a larger and more prolonged energy shock.

The IEA’s Fatih Birol warned last week that this conflict could be the “greatest threat to global energy in history”—which can also be read as a reminder of the urgency to accelerate alternative energy efforts.

Iran war energy crisis equal to 70s twin oil shocks and fallout from Ukraine war, says IEA chief

US dollar up

The US dollar is rising today, as investors seek out a safe haven.

With risk appetite curbed by the escalating retaliatory threats in the Middle East conflict, the dollar’s reputation as a safe-haven asset meant it’s in demand.

The dollar index, which measures the greenback against a basket of currencies, is up 0.2%, while the pound has lost half a cent to $1.329.

Gold price dropping

The gold price is sliding fast today too.

Spot gold has dropped by 4.6% today to $4,280 an ounce, hitting a nearly four-month low.

Gold is suffering from rising expectations of higher global interest rates, traders say.

Tim Waterer, chief market analyst at KCM Trade, explained:

“With the Iranian conflict into its fourth week, and oil prices hanging around the $100 level, expectations have pivoted from rate cuts to potential rate hikes, which have tarnished gold’s appeal from a yield point of view.”

Asia-Pacific markets hit by Iran ultimatum

Donald Trump’s threat to ‘obliterate’ Iran’s power plants unless the strait of Hormuz reopens is hitting global stock markets today.

Markets are finally starting to wake up to the gravity of the potential for long-term impact on energy markets, reports Neil Wilson, investor strategist at Saxo UK.

This is an escalatory doom loop – or ‘escalation trap’ with currently no realistic off-ramp. Neither side has an incentive to back down as the costs of doing so are increasing day by day. Each side thinks pushing harder will force the other to back down.

As well as fears of escalation in the conflict, investors are also bracing for rises in interest rates this year, with central banks under pressure to fight a rise in inflation.

Introduction: Iran war to hit growth and push up prices

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

Growth across the UK economy is expected to almost halve this year, as the Iran war drives up energy prices.

The energy price shock rippling through the UK economy will push up inflation, weigh on spending and delay interest rate cuts, they predict.

KPMG also forecast a slowdown in investment, and. a rise in the unemployment rate – to 5.3% this year and next, up from 4.8% in 2025.

KPMG’S latest economic forecasts — Photograph: KPMG

Yael Selfin, chief economist at KPMG UK, said:

“The outlook for growth in 2026 has taken a hit from the impact of higher energy prices, a cooling labour market and weak household spending.

“The weaker growth outlook coupled with growing cost pressures will likely see firms scale back any investment plans over the coming year. Consumers could also cut back on discretionary spending to offset the squeeze from higher prices.

“With inflation likely to re-accelerate from this summer, the Bank of England will be reluctant to move quickly on rates, meaning households and businesses will face higher borrowing costs for longer, even as the economy slows.”

With fears of a new cost of living crisis growing, Andrew Bailey, the Bank of England governor, is due to meet Keir Starmer and senior ministers later today.

The TUC are calling for an emergency taskforce that would bring employers, unions and the government together to help protect the UK from the economic fallout of the US-Iranian conflict.