UK markets faced significant volatility this week, with the FTSE 100 Index rising marginally by 0.09% vs Friday’s close last week to trade at 9,935 points at the time of writing.
Cautious sentiment dominated markets as investors assessed the latest developments in US Iran talks, including a delay to President Donald Trump’s deadline for a deal. No concrete breakthrough seems to be on the horizon as limited catalysts and concerns over inflation persist. Declines in banking, energy and defence weighed on the index, however UK retail data showed that sales fell less than expected in February, down 0.4%.
The energy crisis resulting from the US war with Iran is damaging British consumer confidence which is at its lowest level since sweeping tariffs were announced by President Trump last year. The Organisation for Economic Co-operation and Development (OECD) now forecasts that the UK will be the lowest growth country in the G7 this year as the energy crisis continues to strain the economy.
Earlier in the year, hopes of falling inflation and interest rates sparked some optimism, boosting the growth outlook after a long spell of subdued forecasts. Much of that optimism has been quelled by the ongoing war in the Middle East and forced the Bank of England to hold interest rates steady at 3.75% earlier this month rather than cutting them as was previously expected. Markets are now forecasting higher for longer interest rates which will take its greatest toll on households and small businesses.
Commodity markets
In the commodity markets, Brent crude futures traded around $110 per barrel on Friday, a broadly flat reading over the past seven days despite a dip below $100 per barrel on a couple of occasions this week. Reports have stated that the Pentagon could send 10,000 troops to the Middle East, whilst Iran are reportedly mobilising over 1 million troops in response.
The deadline to reach an agreement via negotiations was further extended to 6th April with reports that conversations with representatives from Tehran were going “very well”. Trump also noted that Iran had allowed 10 oil tankers to pass through the Strait of Hormuz this week as a gesture of goodwill. This comes at a time when Treasury Secretary, Scott Bessent said an insurance programme to support shipping through the waterway would begin soon. Brent oil remained ar about 50% up from where it was since the conflict began.
Gold prices traded around $4,410 an ounce on Friday following a sharp decline in the previous session following the push back of a deadline to secure a deal to end the war. Gold reacted well to the news that Trump would hold off from targeting Iranian infrastructure facilities, however, no meaningful breakthrough has been achieved on how the two countries can end the war.
Equity markets
US equity futures were down on Friday despite efforts by the US and Israel to calm market fears over the Iran conflict. The S&P 500 and the NASDAQ Composite are on track for their fifth week of losses, with the S&P down 7.34%, and the NASDAQ down 10.11% since their January highs.
The US also is expected to see inflation at levels higher than expected, with the OECD projecting 2026 inflation at 4.2% compared to its previous 2.8% projection and above the Federal Reserve’s own prediction of 2.7%. Recession risks also loom, with Moody’s and Goldman Sachs both revising their recession models higher this week.
Approval ratings for President Trump have continued to trend lower, with a notable downtick since the start of the war in the Middle East, most likely linking to prices at the fuel pump. Americans are currently paying $3.98 per gallon, around a 33% increase since the start of the war.
This is dangerous territory for President Trump given mid-term elections are just seven months away. Polling conducted by the Silver Bulletin, showed a 40% approval rating as of 26th March 2026, however this is down from around 52% since the start of his term in January 2025.
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