This is due to the market focusing more on the potential rising costs, such as oil, which may dampen the prospects for interest rate cuts in the coming months.

On Monday, international benchmark Brent crude dropped 1% to $89 a barrel, and US crude also decreased.

Experts explained that the market had already factored in the tensions between Iran and Israel, which culminated in a non-deadly attack using drones and missiles over the weekend.

Brent crude oil prices reached near-record highs on Friday, driven by tensions between Israel and Iran.

Stock markets in Asia declined due to investor concerns over potential Israeli retaliation.

The FTSE 100 in London initially dropped by 0.5% but later recovered, closing at 7,999 points, only 12 points below its February 2023 peak.

Analysts are increasingly worried about the impact of rising oil prices on the global economy, with Brent up 17% and US crude up almost 19% year-to-date.

There are growing expectations that oil prices could exceed $100 a barrel if tensions persist.

Last week, Iran seized a tanker, claiming it had ties to Israel.

This action raised concerns about potential repercussions for international trade, beyond oil.

Crucial shipments of liquefied natural gas (LNG), other commodities, and consumer goods are also at risk.

These disruptions are not only due to Iran's actions but also attacks by Houthi rebels in the Red Sea.

Upcoming inflation data will reveal if there have been any effects from increased shipping costs.