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The FTSE 100 has entered what’s known as correction territory on Monday, after another fall of 2 per cent for the day made it more than a 10 per cent drop from recent highs.
A market index or share falling past that point is known as correcting – which can often happen after being overbought or, in the case of this situation, when external events change suddenly. The ongoing situation with the Middle East war is now into its fourth week and investors have left global markets in their droves over fears for how much longer matters could continue to unravel.
London’s prime benchmark, the FTSE 100, was within touching distance of 11,000 points at the end of February. The points mark is a representation of the total weight or performance of the 100 companies within the index. Fast forward to last week and it dropped below 10,000 on Friday for the first time since reaching the milestone level in early January.
And a 2 per cent drop in the first two hours of trading this week has seen that plummet to 9,710 points – representing an 11 per cent drop-off from its high point since the first strikes on Iran were launched. The index is also now down for the whole of 2026 for the first time, after outperforming the main US index, the S&P 500, across 2025.
A stock, sector or index dropping 20 per cent from recent high points is known as a bear market, or crash territory.
Elsewhere in Europe, the Dax in Germany was 1.8 per cent lower and France’s Cac 40 fell 1.4 per cent.
It follows heavy falls overnight in Asia as the rhetoric from the US and Iran suggested little sign of a resolution to the conflict, with the Nikkei in Japan ending down more than 3 per cent.
Brent crude lifted 1 per cent to nearly 114 US dollars a barrel after Iran warned it will strike electrical plants across the Middle East if US president Donald Trump follows through on his threat to bomb power stations in the Islamic Republic.
Prime Minister Sir Keir Starmer is heading an emergency Cobra meeting on Monday after a call on Sunday with US president Donald Trump to discuss reopening the Strait of Hormuz shipping route after they both agreed it was “essential” to stabilising global energy markets.
Mr Trump has set a 48-hour deadline that ends just before midnight UK time on Tuesday, warning Iran that the US would attack its power stations unless the country releases its grip on the Strait of Hormuz.
But Iran has said it will retaliate by striking electrical plants across the Middle East if Mr Trump follows through on his threat.
Chris Beauchamp, chief analyst at IG, said: “Investors who have spent the weekend watching fresh strikes in the Middle East are now waiting to see what will happen when Trump’s 48-hour deadline expires tonight.
“But they are in no mood to hang around, and have continued to sell stocks and precious metals.
“Each day that the war goes does more damage to the global economy and drives inflation higher, with recession chances rising by the hour.”
