London close: FTSE 100 drops 1% on central bank hawkishness

18th Jun 2026 16:20

(Sharecast News) - News of a signed peace deal between the US and Iran wasn't enough to lift UK stocks on Thursday, with the FTSE 100 falling over 1% after central bank meetings highlighted the risks of rising inflationary pressures.

The Footsie was down 1.04% at 10,399.70, its lowest finish in a week, with ex-dividend stocks providing a drag.

UK markets followed in the footsteps of US stocks overnight after the Federal Open Market Committee revised up its interest-rate projections for the next three years, causing shares to fall sharply on Wall Street (followed by only a partial rebound on Thursday morning).

In a brief press conference following the decision to keep rates on hold, new Fed chief Kevin Warsh said policymakers were still "unambiguously and unanimously" committed to bringing inflation back to the Fed's 2% target. However, he added that "the Committee will deliver price stability", which markets interpreted as the Fed being prepared to hike rates if necessary.

Back on home shores, the Bank of England left interest rates on hold at 3.75%, as widely predicted. The Monetary Policy Committee voted to leave the cost of borrowing unchanged by a majority of 7-2.

The rate-setting body said that while global energy prices had fallen, they continued to be both high and volatile. "The impact of the energy shock on the UK economy remains uncertain," it said.

"The market excitement and relief earlier in the week around the deal between the US and Iran has been somewhat punctured after the latest round of central bank meetings," said AJ Bell's head of markets, Dan Coatsworth.

"The FTSE 100 was distinctly down in the dumps, as a combination of stocks trading without the rights to their latest dividend, weak energy prices and a Bank of England meeting which did little to dispel fears about inflation or rates tripped the index up. In the background, the Makerfield by-election added some political uncertainty to the mix."

Meanwhile, Brent crude was down 2.6% at $77.52 a barrel, falling to levels not seen since the outbreak of the Iran war, after US president Donald Trump and Iranian President Masoud Pezeshkian digitally signed a 14-point memorandum of understanding.

The US president signed the MOU before a dinner in Versailles with French President Emmanuel Macron and others. Trump said the deal averts a "worldwide depression". The MOU extends the ceasefire between the US and Iran for a minimum of 60 days, allowing a final deal to be negotiated.

In other news, investors were digesting UK labour market data after the unemployment rate unexpectedly eased in April. The rate was 4.9% in the three months to April, up 0.3 percentage points on the year but down 0.3 percentage points since the last quarter. The market had been expecting no change.

Ex-div stocks weigh

Heavyweights Persimmon, Land Securities, British Land and 3i Group all fell as they traded without the entitlement to their latest dividend payments.

Informa was the Footsie's standout performer after the media blue chip reaffirmed full-year guidance. Updating on trading ahead of the annual general meeting, Informa said underlying revenues had grown 6.4% in the five months to 31 May.

Intertek advanced as it agreed to be taken over by Swedish private equity firm EQT in a £9.5bn deal.

On the FTSE 250, FirstGroup's share price jumped after the travel operator beat market forecasts with its full-year results despite "significant headwinds" and unveiled a new £100m share buyback.

AEP and GB Group both fell as they traded ex-dividend.

Market Movers

FTSE 100 (UKX) 10,399.70 -1.04%

FTSE 250 (MCX) 23,330.72 -0.15%

techMARK (TASX) 5,834.88 -1.02%

FTSE 100 - Risers

Informa (INF) 863.60p 3.05%

Smurfit Westrock (DI) (SWR) 3,407.00p 2.56%

International Consolidated Airlines Group SA (CDI) (IAG) 463.10p 2.30%

JD Sports Fashion (JD.) 86.72p 2.22%

IMI (IMI) 3,036.00p 2.08%

Spirax Group (SPX) 7,110.00p 2.08%

Next (NXT) 14,440.00p 1.94%

Melrose Industries (MRO) 483.30p 1.94%

Lion Finance Group (BGEO) 11,550.00p 1.76%

Intertek Group (ITRK) 5,815.00p 1.66%

FTSE 100 - Fallers

London Stock Exchange Group (LSEG) 8,338.00p -7.00%

Fresnillo (FRES) 3,117.00p -5.83%

Persimmon (PSN) 1,050.00p -5.75%

ICG (ICG) 1,735.00p -4.20%

Relx plc (REL) 2,348.00p -4.01%

Land Securities Group (LAND) 630.50p -3.67%

BP (BP.) 490.05p -3.42%

British Land Company (BLND) 401.40p -3.42%

The Sage Group (SGE) 802.80p -3.32%

Anglo American (AAL) 3,995.00p -3.12%

FTSE 250 - Risers

FirstGroup (FGP) 188.50p 8.21%

SDCL Efficiency Income Trust (SEIT) 34.00p 5.43%

Raspberry PI Holdings (RPI) 884.00p 5.36%

Oxford Instruments (OXIG) 3,018.00p 4.69%

C&C Group (CDI) (CCR) 97.50p 4.28%

Vistry Group (VTY) 252.00p 3.53%

SSP Group (SSPG) 184.70p 3.36%

Pacific Horizon Inv Trust (PHI) 1,214.00p 3.06%

Wizz Air Holdings (WIZZ) 1,191.00p 3.03%

Syncona Limited NPV (SYNC) 99.90p 2.99%

FTSE 250 - Fallers

GB Group (GBG) 191.00p -7.51%

Hochschild Mining (HOC) 572.50p -7.21%

Endeavour Mining (EDV) 4,180.00p -5.30%

Kainos Group (KNOS) 790.00p -5.11%

Pan African Resources (PAF) 113.10p -4.91%

Bridgepoint Group (Reg S) (BPT) 243.60p -4.62%

WPP (WPP) 272.10p -4.39%

BlackRock World Mining Trust (BRWM) 989.00p -4.35%

Harbour Energy (HBR) 232.00p -3.57%

Ithaca Energy (ITH) 222.80p -3.38%