Stock prices in London closed mostly higher on Friday, buoyed by news that US consumer inflation decelerated more sharply than anticipated last month. The FTSE 100 index advanced 43.91 points, or 0.4%, to settle at 10,446.35. Similarly, the FTSE 250 gained 122.28 points, or 0.5%, reaching 23,427.27, while the AIM all-share index edged up 0.69 points, or 0.1%, to 811.85.
US Inflation Data Provides Market Boost
The annual Consumer Price Index (CPI) rate in the United States stood at 2.4% year-on-year in January, down from 2.7% in December and below the consensus forecast of 2.5%. On a monthly basis, consumer prices increased by 0.2%, following a 0.3% rise in December, which was also lower than the expected 0.3%.
The core index, which excludes volatile food and energy components, rose 2.5% annually in January, matching expectations and slowing from 2.6% previously. Monthly core goods prices accelerated to 0.3%, as anticipated, up from 0.2%.
Defence Stocks Surge on UK Spending Announcement
In other significant news, Britain has committed £400 million this year to develop long-range missiles as part of a "new deal for European security," Defence Secretary John Healey announced. The funding will support the replacement of the Storm Shadow missile, including the Stratus "stealth" missile developed with France and Italy, and the Deep Precision Strike system in collaboration with Germany.
This announcement propelled defence-related stocks higher. Melrose Industries climbed 3.7%, Rolls-Royce increased 3.6%, and BAE Systems rose 2.2%. Mr. Healey is expected to discuss these projects and further industrial cooperation with European allies at the ongoing Munich Security Conference.
Notable Stock Movements
NatWest was the biggest decliner among blue-chip stocks, falling 4.1% despite reporting stronger-than-expected annual results. The Edinburgh-based lender posted total income of £16.64 billion for 2025, up 13% year-on-year and ahead of analyst consensus of £16.53 billion. Operating pretax profit surged 24% to £7.71 billion, also exceeding estimates.
Shore Capital noted that NatWest's results were "strong," reinforcing its position as a high-return, capital-generative UK franchise with robust credit trends and clear headroom for dividends and buybacks.
On the AIM market, EPE Special Opportunities closed 9.8% higher after announcing plans for up to £3.0 million in share buybacks using existing cash reserves. Conversely, Tern dropped 10% following an open offer to raise up to £384,408 through the issue of shares at a 20% discount.
Global Market Overview
In European equities, the Cac 40 in Paris closed down 0.4%, while the Dax 40 in Frankfurt edged up 0.2%. Across the Atlantic, New York stocks were higher, with the Dow Jones Industrial Average and S&P 500 both up 0.3%, and the Nasdaq Composite showing marginal gains.
The pound was quoted at 1.3626 dollars at the London close, slightly down from 1.3628 on Thursday. The euro stood at 1.1868 dollars, nearly unchanged. Brent oil declined to $67.48 a barrel from $68.08 late Thursday.
US Treasury yields narrowed, with the 10-year yield at 4.06% and the 30-year yield at 4.70%.
Top Performers and Decliners
The biggest risers on the FTSE 100 included 3i, up 142.20p at 3,411.40p; Melrose, up 23.17p at 646.17p; Rolls-Royce, up 44.38p at 1,270.38p; Halma, up 134.00p at 3,876.00p; and Fresnillo, up 90.00p at 3,858.00p.
The biggest fallers were NatWest, down 24.40p at 570.60p; Barclays, down 13.51p at 450.09p; Entain, down 16.87p at 578.33p; Croda, down 77.00p at 3,056.00p; and HSBC, down 26.49p at 1,240.11p.
Upcoming Economic and Corporate Events
On Monday, US markets will be closed in observance of George Washington's Birthday. Economic data releases include industrial production figures from the eurozone and Japan. No significant corporate events are currently scheduled in the UK.
