Ftse 100 COLLAPSES more than 300 points as US-Iran war pushes stock market 'firmly in red'

The Ftse 100 has collapsed by nearly 300 points today following the Bank of England's decision to keep the base rate at 3.75 per cent in response to the US-Iran war/

A dramatic surge in gas prices has resurrected inflationary concerns, leading the central bank's Monetary Policy Committee (MPC) to hold off a much-anticipated cut to interest rates.

This appears to have spooked the City and retail investors as London's benchmark index sat just above 10,000 points by 1:20 pm this afternoon.

Prior to President Donald Trump and Israel's decision to take military action against the Islamic Republic, the Ftse was flirting with crossing the 11,000 threshod.

Both the US Federal Reserve and European Central Bank (ECB) have also paused cuts to borrowing costs for the time being as the conflict in the Middle East rages on.

The price of gold has also plummeted over the past week, sitting at around £3,430.50 this afternoon, despite being widely perceived as a safe haven for investors.

Dan Coatsworth, head of markets at AJ Bell, said: "Financial markets were firmly in the red as investors reacted to the Middle East conflict intensifying, with stocks down across Asia and Europe.

"Gold also fell, which suggests investors are once again liquidating assets that have previously served them well, or they are reacting to a further strengthening in the US dollar. Gold often declines when the US dollar appreciates as the metal becomes more expensive for buyers of other currencies.

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"Economically sensitive stocks were among the biggest fallers on the UK stock market, including banks and miners. An inflation spike threatens to cause economic damage, and that clouds the earnings outlook for lenders and commodity producers.

"That’s a worst-case scenario, and it’s important to consider that a quick resolution to the conflict could lead to a small scratch rather than a deep cut for corporate earnings. What’s annoying investors is the ongoing uncertainty – it’s impossible to make a call on what will happen next, so markets are taking it one day at a time."

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