FTSE 100 Advances in Quiet Session as Defence Stocks Rally
London's stock market experienced a subdued trading day on Monday, with the FTSE 100 index closing higher, driven by gains in defence and banking sectors. The blue-chip index rose 27.34 points, or 0.3%, to settle at 10,473.69, while the FTSE 250 declined by 51.80 points, or 0.2%, to 23,375.47. The AIM all-share index also dipped slightly, losing 0.44 points, or 0.1%, to close at 811.41.
Trading volumes were notably thin due to holidays in the United States and Canada, with US markets closed for Washington's Birthday and Canadian markets observing Family Day. In European equities, the CAC 40 in Paris edged up 0.2%, whereas the DAX 40 in Frankfurt fell 0.5%.
Defence Stocks Soar on Prime Minister's Comments
Defence stocks were a standout performer, climbing after Prime Minister Sir Keir Starmer emphasised the need for Britain to accelerate defence spending. Speaking at an event in London, Starmer highlighted the ongoing threat of Russian aggression, particularly noting the upcoming four-year anniversary of the conflict in Ukraine. He stated, "We need to step up when it comes to defence and security. That means on defence spending, we need to go faster."
While Starmer has previously committed to increasing defence spending to 2.5% of GDP next year and 3% after the next election, reports suggest he is considering advancing the 3% target to 2029. This follows calls from the head of the UK's armed forces for rearmament on moral grounds. In response, shares in Melrose Industries surged 3.9%, Babcock International gained 3.5%, and BAE Systems advanced 3.0%.
Banking Sector Boosted by NatWest's Buyback
NatWest Group led the FTSE 100 risers, jumping 4.8% as it commenced a previously announced £750 million share buyback programme, set for completion by January 15 next year. This rebound followed a 4.1% drop on Friday after the bank released its annual results. Other notable gainers included Metlen Energy & Metals, which added 1.05p to close at 36.30p.
Conversely, the biggest fallers on the FTSE 100 were Mondi, down 40.80p to 913.80p, Barratt Redrow, which lost 15.00p to 373.90p, and St James's Place, declining 48.00p to 1,197.50p. Relx and Berkeley Group also saw significant drops, falling 83.00p and 132.00p respectively.
Pinewood Technologies Plunges on Withdrawn Bid
On the FTSE 250, Pinewood Technologies suffered a dramatic 33% decline after private equity firm Apax Partners withdrew its takeover interest. Apax cited "prevailing challenging market conditions" as the reason for not proceeding with a formal offer, despite earlier discussions about a possible cash offer of 500 pence per share. Pinewood, a technology provider to car retailers and manufacturers, expressed confidence in its long-term prospects but faced investor concerns over AI disruption risks.
AJ Bell analyst Dan Coatsworth noted, "Investors are now worrying why a big-name bidder has suddenly walked away, and whether Pinewood is going to be lumped with the multitude of other stocks that have struggled this year due to AI disruption-related fears."
Small Caps and Commodities Show Mixed Movements
Among small caps, Pebble Beach Systems saw its shares leap 25% after securing a five-year contract worth an initial £1.3 million with a tier-1 US-based streaming company. The deal supports the customer's expansion into live sports broadcasting, with Pebble providing maintenance services over the contract term.
In commodity markets, Brent oil rose to $68.42 a barrel from $68.08 late Friday, while gold increased to $4,985.30 an ounce from $4,932.33. Currency movements were minimal, with the pound slightly higher at $1.3629, the euro lower at $1.1854, and the dollar stronger against the yen at 153.44 yen.
Economic Calendar and Corporate Results Ahead
Looking ahead, Tuesday's economic calendar features UK unemployment data, German and Canadian consumer price index figures, and the New York empire state manufacturing index. In the UK, full-year results are expected from companies such as miner Antofagasta, hotel firm InterContinental Hotels Group, and soft drinks bottler Coca-Cola Europacific Partners.
Overall, the London market demonstrated resilience amid quiet trading, with defence stocks providing a significant lift following political developments, while individual corporate stories drove volatility in specific sectors.
