United Kingdom: FTSE 100 Slumps Nearly 3%

The FTSE 100 plunged 2.9% on Tuesday, marking its biggest one-day drop since April 2025, as the escalating Middle East conflict rattled investors. Banks and travel stocks led the selloff amid fears that prolonged tensions and surging oil prices could disrupt economic activity and keep inflation elevated, prompting traders to scale back expectations for near-term interest rate cuts. Oil major BP was a rare gainer, rising about 1% as crude prices jumped. Lenders including HSBC Holdings, Barclays and Lloyds Banking Group fell between 3.2% and 5.4%. International Airlines Group dropped over 6.5% as airspace closures triggered flight cancellations, dragging the broader FTSE 350 travel and leisure index down 3%. Meanwhile, the Office for Budget Responsibility cut its 2026 growth forecast, adding to the cautious outlook.