London Markets Extend Recovery as Falling Crude Prices Boost Investor Sentiment

The FTSE 100 and FTSE 250 gain as falling oil prices offset Middle East war fears. Softcat and Diploma shares surge following upgraded profit and sales forecasts.

By: AXL Media

Published: Mar 18, 2026, 10:12 AM EDT

Source: Reuters

FTSE Indices Gain as Energy Sector Corrects

The FTSE 100 rose 0.3% by midday, marking its third consecutive day of gains, while the domestically focused FTSE 250 outperformed its larger peer with a 1% jump. This positive movement came even as the energy sector retreated 0.6% from the record highs reached earlier in the week. The decline in energy stocks was led by Ithaca Energy, which tumbled 5.2% after reporting a transition to an annual net loss. The broader market, however, found support in the aerospace and defense sectors, which climbed 2%, and financials, which added 1.9%.

Relief from the Global Oil Shock

The primary driver for the improved market mood was the cooling of crude prices following news that Iraq had resumed exports through the Ceyhan pipeline. This development has provided a temporary buffer against the "war premium" that has dominated energy markets since the start of the Iran-Israel conflict. Analysts note that while the Strait of Hormuz remains a focal point of geopolitical tension, the restoration of northern supply routes has diminished immediate fears of a global energy scarcity, allowing equity valuations in transport and manufacturing to recover.

Shifting Bank of England Rate Expectations

At home, British government borrowing costs—gilt yields—fell to their lowest level in a week. However, they remain elevated compared to pre-conflict levels as the Bank of England (BoE) prepares for its next Monetary Policy Committee meeting. A recent Reuters poll revealed that most economists have abandoned expectations for a rate cut on March 19, with the consensus shifting toward a first reduction in April or June. Market experts suggest the BoE will likely "look through" the current energy shock, maintaining the Bank Rate at 3.75% for now to ensure inflation remains on a downward path.