European Markets Decline After Heathrow Airport Closure; IAG, Owner of British Airways, Drops 1.9%

European markets closed lower on Friday, led by declines in the travel sector, which fell 1.6% following the closure of Heathrow Airport.

Major European indices, including the Stoxx 600, France’s CAC 40, and the UK’s FTSE 100, all ended the day about 0.6% lower, while Germany’s DAX lost 0.5%.

The travel and leisure sector dropped around 1.6% after Heathrow Airport in London was closed due to a fire at a nearby electrical substation. International Airlines Group, the owner of British Airways, saw its shares drop by about 1.9%.

Basic resources stocks, such as those of ArcelorMittal and pulp processor Stora Enso, also suffered losses, falling around 2.3%.

European investors were digesting updates on monetary policy from several central banks in the region, as well as the Federal Reserve in the US. On Friday, Russia’s central bank kept its key rates at 21%, citing high inflationary pressures. On Thursday, the Swiss National Bank cut interest rates by 25 basis points, while the Bank of England kept rates stable in the UK, and Sweden’s Riksbank also opted not to change interest rates.

The Bank of England stated that since its last meeting, global trade policy uncertainty has intensified, with the US making a series of tariff announcements, some of which prompted responses from other governments. Additionally, other geopolitical uncertainties have increased, and financial market volatility indicators rose globally.

This came after the Federal Reserve also kept its key interest rate stable on Wednesday. Although the Fed indicated it still expects two interest rate cuts this year, officials downgraded their US economic growth forecast for 2025 and noted that uncertainty had increased, with tariffs set to add inflationary pressure.