10 March 2026
Last week, Bank of England (“BoE”) policymaker Alan Taylor noted that the economic impact of the escalating Middle East conflict is uncertain, and that the UK faces downside growth risks if energy costs persist. A conflict-driven energy price surge has led markets to reduce expectations for a March rate cut to below 50%, with traders entirely pricing out a second rate reduction for 2026 due to spiralling inflation fears. The UK labour market presents a worrying picture, with youth unemployment spiking to 16.1% and the Office for Budget Responsibility (“OBR”) forecasting overall unemployment to peak at a 12-year high of 1.93 million. Rising energy costs have triggered fears of a new price shock, causing economic confidence to plummet, with the Institute of Directors (“IoD”) index dropping to -63 in February. Political uncertainty remains high as PM Keir Starmer's government faces backbench pressure after a by-election loss to the Green Party.
In equities, the FTSE 100 index finished the week down to 10,250, bringing its year-to-date gain to 3.00%. Chancellor Rachel Reeves delivered a subdued Spring Statement, aiming to maintain fiscal stability amid tensions in the Middle East. The Chancellor utilised a £22 billion tax receipts windfall, increasing fiscal headroom to £23.6 billion, yet offered an uneventful update without policy surprises. Separately, UK officials will soon detail a closer EU trade relationship, though the House of Commons foreign affairs committee criticised the proposed reset as overly secretive and lacking clear objectives. In currency markets, sterling strengthened against the dollar to 1.347.
Across the Atlantic, February's jobs report showed a 92k decline and a 69k downward revision for the prior two months, while January retail sales fell. However, February's Institute for Supply Management (“ISM”) manufacturing expanded for the second month, and ISM services hit its highest level since August 2022. Major US equity indices declined with the Dow Jones falling 3.01%, and the S&P 500 dropping 2.02% (its worst since October), amid concerns surrounding Business Development Companies (“BDCs”) and private credit redemptions, and a mixed Artificial Intelligence (“AI”) narrative. News of US rules requiring permission for AI chip exports initially hit AI-linked names such as AMD (-3.9%), but software stocks rallied. Treasuries were sold off sharply, with the two-year yield up 0.17% to 3.56% and the 10-year up 0.18% to 4.14%. The US Dollar Index rose 1.4%, and Gold fell 1.7%.
The Iran conflict dominated the week after the US and Israel killed Iran's Supreme Leader, Ayatollah Ali Khamenei, leading to Iranian retaliation against US bases, embassies and regional oil infrastructure. This major geopolitical conflict and the effective closure of the Strait of Hormuz sparked production shut-in fears, driving WTI crude up 35.6% above $90 a barrel and making it one of the sharpest weekly gains in decades.
The UK housing market saw a cautious start to the year, with BoE data showing net mortgage approvals dropping to 60,000, missing the 62,000 consensus and marking the weakest reading since April 2025. However, house prices remained steady, as both the Nationwide and Halifax indices recorded a 0.3% month-on-month increase in February.
Rightmove, the UK's largest online real estate portal and property website, rose 4.84% after successfully avoiding relegation from the prestigious FTSE 100 index following a recent slump. The steady gain, which highlights the market's renewed appreciation for the firm's resilient business model, underscores the underlying strength still present within UK property services despite broader anxieties over a £60 million investment in artificial intelligence. This upward momentum further validates the appeal of dominant market leaders, as investors capitalise on an attractive valuation to back proven operators.
Entain, the British international sports betting and gambling company, gained 3.80% after its full-year core earnings comfortably beat analyst forecasts. The solid rebound, which highlights the firm's robust strategic positioning and its pledge to offset the brunt of a looming UK online gambling tax hike, underscores the underlying resilience and reliable cash generation still present within UK leisure stalwarts despite broader market headwinds. This positive assessment from institutional investors signals confidence in the company's US joint venture, BetMGM, and its ability to maintain a competitive edge.
Intertek Group, the British multinational assurance, inspection, product testing and certification company, fell 14.93% after missing organic revenue growth forecasts and reporting weaker-than-expected free cash flow. The sharp decline reflects growing concerns that the company’s core testing business may be entering a period of slower revenue growth, compounded by rising restructuring costs. The move highlights the lingering vulnerability within UK industrial support stocks, even as the broader London market has demonstrated relative resilience. This downward momentum reflected institutional apprehension over the firm's near-term revenue generation targets.
Market Commentary prepared by Walker Crips Investment Management Limited.
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No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
The value of investments can fall as well as rise. Investors may get back less than invested. Past performance is not a reliable indicator of future results.
The value of investments can fall as well as rise. Investors may get back less than invested.
