London's benchmark equity index opened the week weaker on Monday, with the FTSE 100 extending earlier losses as a spike in oil prices tied to escalating tensions in the Middle East weighed on investor sentiment. By 08:36 GMT, the FTSE 100 had fallen 1.6% while the pound was trading lower against the dollar, down 0.8% to 1.3306.
The selloff in the UK was mirrored across European markets. Germany's DAX was down 2.3% and France's CAC 40 fell 2.6%, reflecting a broad risk-off tone across the region as traders reacted to a sharper move higher in crude markets.
Energy markets were at the centre of the price action. Brent futures traded at $104.31 as of 08:41 AM GMT on Monday, pushing oil back above the $100 per barrel threshold. That move coincided with the decline in equities and the softer pound, illustrating how commodity price swings can feed through to financial markets.
Policy and market commentary
Jefferies' analysts flagged that current pricing in eurozone and UK rate markets implies a material divergence in expectations for policy moves. The firm noted that markets are pricing in more than 1.5 rate hikes from the European Central Bank, while expectations for the Bank of England point to less than one cut in 2026.
According to Jefferies, the recent volatility in front-end rates appears to be driven largely by position squaring among investors rather than fundamental changes in inflation expectations. In the firm’s view, there is a base case of no policy changes from the ECB this year.
With oil prices having risen, Jefferies said that its outlook leans toward potential rate cuts rather than hikes if any policy adjustment were to occur. The analysts characterised the recent oil price spike as an external shock that should not, by itself, compel a central bank response unless crude were to remain above $100 per barrel for an extended period and begin to produce second-round effects in the wider economy.
Jefferies also set a conditional benchmark for possible policy implications: if oil prices were to drop back below $80 within a three-month window, the firm does not expect ECB policy decisions to be affected by the current price move.
UK corporate updates
M&C Saatchi said on Monday that Zaid Al-Qassab will step down as chief executive and leave the board on March 31, 2026, by mutual agreement. The firm indicated that Dame Heather Rabbatts, who currently serves as Non-Executive Chair, will take on the role of Executive Chair on an interim basis until a new chief executive is appointed.
The company said it will conduct a formal and wide-ranging search for a successor. During the transition, Dame Heather will focus on executing the company’s growth strategy and supporting senior management. An operating board made up of senior leadership team members will operate through the interim period.
Separately, GSK plc disclosed a licensing agreement with Alfasigma S.p.A. under which the Italian firm will acquire worldwide exclusive rights to develop, manufacture and commercialize linerixibat. The drug is an investigational ileal bile acid transporter inhibitor being assessed as a treatment for cholestatic pruritus in primary biliary cholangitis, and it is under regulatory review in multiple jurisdictions including the US, EU, UK, China and Canada.
GSK noted that linerixibat has received Orphan Drug Designation in the US, EU and Japan, and priority review status in China for the treatment of cholestatic pruritus in primary biliary cholangitis patients.
Market takeaway
The opening moves on Monday illustrated how geopolitical tensions and the associated rise in oil can trigger cross-market repricing. Equity indices in the UK and Europe fell, the pound eased against the dollar, and energy futures climbed above a psychologically important $100 threshold. Analysts emphasised that the extent and persistence of crude’s rise will be critical in determining whether central banks feel compelled to respond.