More than £65billion was wiped off the value of the London stock market yesterday as soaring oil and gas prices wreaked havoc on global markets.
On a brutal day for savers with money tied up in shares through their pensions, ISAs and other investments, the FTSE 100 tumbled 241.79 points, or 2.4 per cent, to 10,063.50.
The blue-chip index has now fallen nearly 8pc since hitting an all-time high of close to 11,000 at the end of last month, before war erupted in the Middle East.
The wider FTSE All-share, which includes smaller companies on the London stock market as well as the top 100, also fell more than 2 per cent yesterday.
That wiped £65.4billion off the value of Britain’s listed firms, and took losses since the US and Israel attacked Iran to £235billion.
The losses were mirrored across Asia, Europe and the US where the Dow Jones Industrial Average, S&P 500 and Nasdaq fell to their lowest levels of the year, before rallying.
Panic: On a brutal day for savers with money tied up in shares through their pensions, ISAs and other investments, the FTSE 100 tumbled 241.79 points, or 2.4%
Even gold, traditionally a ‘safe haven’ in times of trouble, tumbled to $4,500 an ounce as it headed for its worst week since 1983.
The latest ructions, which also saw bond yields spike higher, came as gas prices jumped more than 30 per cent and oil raced towards $120 a barrel having been around $70 just three weeks ago. Crude later fell back.
The turmoil fuelled fears that the world faces a punishing bout of ‘Trumpflation’ as war sends the cost-of-living soaring.
The Bank of England warned that a ‘protracted’ shock could force it to raise interest rates to combat inflation, sparking warnings of a hike as soon as next month followed by two more before Christmas.
That would take UK interest rates from 3.75 per cent to 4.5 per cent – hammering households and business who until the war expected rates to fall as low as 3 per cent this year.
The ten-year gilt yield – a key measure of government borrowing costs – hit 4.9 per cent for the first time since January 2025, having been as low as 4.2 per cent last month.
Higher interest rates threaten to weaken a floundering economy with figures yesterday showing unemployment stuck at a five-year high of 5.2 per cent and youth unemployment of 14.5 per cent, a level not seen since early 2015.
‘The spectre of stagflation is looming as inflationary pressures mount while consumers and companies turn increasingly cautious,’ said Susannah Streeter, chief investment strategist at Wealth Club.
Economists warned UK gilt yields are being driven higher by the prospect of government support for households struggling with soaring energy bills.
‘High energy prices are fuelling growing speculation around whether the Government will need to step in and provide further support,’ said Thomas Pugh, chief economist at consulting firm RSM UK.
‘Given the UK government’s precarious fiscal and political position, there is a greater risk of a need for more borrowing, which is leading to higher gilt yields.’
Chris Beauchamp, chief market analyst at IG, said: ‘All thought of longer-term value has been cast aside as investors rush for the exits.
‘Europe’s fragile economies are ill-placed to weather an oil price shock, and this realisation is finally beginning to have material impact on equity markets this side of the Atlantic.’
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