British Airways owner IAG sees stock price plummet as FTSE 100 falls in wake of Iran strikes

The FTSE 100 has suffered a drop of more than 1 per cent on Monday, as stock markets around the world react to strikes on Iran by the US and the ensuing crisis across the Middle East.

While the prices of oil and gold have both gone up, stock markets are heading in the opposite direction as investors weigh the uncertainty and risk around businesses of different types.

In London’s main index, British Airlines owner IAG was one of the biggest fallers in morning trading, falling up to 7 per cent before clawing back some ground, though was still down 5 per cent approaching noon GMT.

BA is among the airlines who have cancelled flights to Tel Aviv and Bahrain, while higher fuel costs may also impact on transport firms.

Informa, an events organising firm, fell up to 9 per cent before also inching back upwards, as the heaviest-hit share price early on over fears around their business exposure in the Middle East.

Barclays, HSBC and Standard Chartered were among the banks also suffering losses, each down more than 4 per cent in the six biggest fallers of the morning.

However, the FTSE 100 as a whole was protected from further falls due to its defensive nature – energy firms like BP and Shell both rose around 2 per cent on expectation of higher oil prices, while defence firm BAE Systems was the biggest gain of the morning, up almost 5 per cent.

“Scenes in the Middle East have caused widespread nervousness across financial markets. The US attacks on Iran have caused oil prices to soar amid fears of disruptions to supplies, pushing up costs for businesses and consumers. That ranges from costing more to fill up the car to making it more expensive to run factories,” explained Dan Coatsworth, head of markets at AJ Bell.

There is more at stake for companies’ share price than just their business exposure to the region, however.

Rising oil prices have an inflationary effect on economies, which in turn makes it more likely interest rates stay higher for longer – and stock markets typically do better when rates come down.

“If the issues persist then the market will start to worry about new inflationary pressures and that could lower expectations for near-term interest rate cuts. Central banks hold or raise rates in the fight to bring inflation lower,” continued Mr Coatsworth.

“Financial markets typically prefer lower rates to higher ones, and any prospect of rates staying put or even going up would be taken as a negative for share and bond prices. A higher cost of borrowing would be negative for consumer and business sentiment, and feed into slower economic growth.

“While these scenarios will be front of mind, investors might be taking one day at a time while they try to ascertain if this is a short, sharp event or one that could drag on for ages.”

Monday’s downturn is one of the first real setbacks for the FTSE 100 this year, just as the index of UK-listed companies looked set to hit brand new highs of 11,000 points for the first time ever. At noon, only 19 of the 100 firms in the index were up in share price for Monday.

Even after falling, the index is up 9 per cent this year already, in contrast to many others which have struggled for consistency.

The US’ S&P 500 was down 0.4 per cent across 2026 up to the end of last week’s trading, while the Nasdaq Composite was down 2.5 per cent. Both are expected to fall further once US trading opens later this afternoon.

Elsewhere, France’s CAC 40 is up only 3.5 per cent for the year so far, while Germany’s DAX is up 1.3 per cent.

A notable outlier has been South Korea’s KOSPI, up a massive 48 per cent since the start of the year, though there are fears around the index’s concentration given so much of that growth has been reliant on two firms, Samsung and Hynix.