UK and European equities began the week under clear pressure as investors repriced inflation risk after the sharp jump in crude. London was dragged lower by weakness in travel, industrial and rate-sensitive shares, while the main continental indices also softened as the energy shock revived concern that easing cycles from the Bank of England and the European Central Bank could be delayed. The main area of resilience remained the large oil names, with BP and Shell providing some support against an otherwise defensive tone across the region.

US opened on a risk-off footing, with the broad sell-off reflecting renewed stagflation concerns rather than a simple growth scare. Investors moved away from cyclical exposure as the surge in energy prices raised the prospect of firmer inflation, tighter financial conditions and a more cautious path for monetary easing. The mood in the US market was therefore shaped less by company-specific drivers and more by a macro shock that hit sentiment across equities, rates and volatility simultaneously

Asia-Pacific markets absorbed the initial shock most sharply, with the region unsettled by both the rise in oil and the implications for trade, transport and imported inflation. Export-heavy and energy-sensitive markets were notably weaker, and the tone across the region suggested investors were reducing risk quickly rather than waiting for clearer policy signals.

Oil dominated the session and remained the central market driver. Crude surged to its highest levels in years as traders reacted to severe disruption risk in the Gulf, with concern focused on production losses, tanker flows and the wider security of supply routes. Even after retreating from the session extremes, the move was large enough to alter inflation expectations, unsettle bond markets and reshape equity leadership in favour of energy producers.

Gold did not provide the usual safe-haven response. Instead, bullion came under pressure as investors favoured the dollar and as higher bond yields increased the opportunity cost of holding non-yielding assets. That left gold caught between geopolitical support on one side and a stronger US currency plus rising rate expectations on the other, producing a softer tone despite the broader risk-off backdrop.

UK equity and company news was mixed. Within the large-cap market, BP and Shell stood out as relative beneficiaries of the oil shock, helping to cushion the FTSE even as the broader index fell back. Away from energy, sectors tied to the consumer, travel and domestic rates expectations remained under pressure, reflecting concern that a renewed commodity-led inflation pulse could make the UK policy outlook more difficult and weigh on earnings momentum across more cyclical parts of the market.

On the corporate side, recent reporting from Grafton pointed to a business that remains operationally resilient but cautious on near-term trading conditions in Great Britain, where management flagged a slow start to the year and expected improvement only later on. In parallel, UK listed insurance remained in focus after Zurich confirmed its takeover of Beazley, underlining that overseas buyers still see strategic value in London listed specialist assets even as the wider market navigates a more volatile macro backdrop.