The FTSE 100 experienced a decline during volatile trading on Tuesday, influenced by mixed signals from the Middle East conflict that drove oil prices higher and dampened risk appetite, while investors also adjusted their expectations for additional rate hikes. The blue-chip FTSE 100, which had traded higher earlier in the session, was down 0.1% at a three-month low, as of 1039. The mid-cap FTSE 250 fell 0.4% to a near 10-month low as mid-caps, which are more vulnerable to domestic pressures, were impacted by rising energy costs.

The benchmarks’ decline mirrored the performance of global equities, as the relief rally following U.S. President Donald Trump’s bombing of Iran’s power grid lost momentum, resulting in a lack of clarity for investors regarding the outcome of the conflict. UK energy stocks rose 0.8%, mirroring oil prices, which rebounded to above $100 a barrel following Iran’s statement rejecting Trump’s claim of “productive” talks with Tehran.

Current market expectations indicate two quarter-point rate hikes by the Bank of England this year, with a potential for a third, a reduction from the four anticipated prior to Trump’s remarks on Monday. Miners fell 0.4% and banks declined 0.9%, respectively, were among the biggest drags on the day. Among individual stocks, Bellway fell 10% after the home builder trimmed its profit margin outlook and echoed warnings on risks to the housing market from the Middle East conflict.

S4 Capital surged 26% after the advertising group indicated that it anticipates its 2026 net revenues will align with analyst expectations, despite noting a decline in the first quarter due to reduced client spending attributed to the ongoing conflict. YouGov fell 8% after the market research firm warned of lower annual profit due to additional investments in its Shopper division.