London open: Defence stocks pace gains amid prospect of increased spending
By Michele Maatouk
Date: Monday 03 Mar 2025
(Sharecast News) - London stocks jumped to fresh record highs in early trade on Monday, with defence names surging on the prospect of increased spending
At 0835 GMT, the FTSE 100 was up 0.4% at 8,844.20.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The Footsie has surged into the green in a spurt of Monday motivation, with the index hitting a fresh record level. Better prospects for China's economy and the expectation of increased state spending on military capabilities are offsetting jitters about fraught geo-politics and US tariffs concerns.
"Defence contractors leading the charge higher, with BAE Systems up by more than 18% in early trade. The shocking clash between Trump, Vance and Zelensky has brought the need for Europe to increase collective security into sharp focus. A show of co-operation among leaders at the weekend in London has reinforced expectations that military budgets will swell in a new era of collaboration to counter the Russian threat."
Sentiment was also boosted by the latest survey out of China, which showed that activity in the manufacturing sector grew in February at its fastest pace in three months.
The Caixin/S&P Global manufacturing purchasing managers' index rose to 50.8 from 50.1 in January, beating expectations for a reading of 50.3. A reading above 50.0 indicates expansion, while a reading below signals contraction.
Wang Zhe, senior economist at Caixin Insight, said: "Overall, the market showed clear signs of recovery, with manufacturers launching new products.
"The holiday period saw robust consumption momentum, and technological innovations in certain industries added to the positive sentiment, helping sustain the manufacturing market recovery."
The official PMI released on Saturday by the National Bureau of Statistics rose to 50.2 in February from 49.1 the month before. The non-manufacturing PMI ticked up to 50.4 from 50.2.
Elsewhere, bitcoin shot higher after US President Donald Trump announced over the weekend the creation of a "strategic crypto reserve" that will include bitcoin and ether, among others.
Kathleen Brooks, research director at XTB, said: "Trump said he wanted to make the US the crypto capital of the world, which has sent crypto soaring at the start of this week. Bitcoin rose sharply immediately after this news; Bitcoin/ USD rose to $95,000, although it has since given back some early gains and is consolidating on Monday."
In equity markets, BAE Systems surged to the top of the FTSE 100, with Rolls-Royce, Melrose, Qinetiq, Chemring and Babcock also sharply higher.
The sector got a lift after the UK hosted a summit on Ukraine in London, with France's Emmanuel Macron and UK Prime Minister Keir Starmer proposing a one-month ceasefire that would cover air, sea and energy infrastructure.
Also over the weekend, Starmer announced a £1.6bn finance deal to help Ukraine buy 5,000 missiles.
Spirent Communications gained as US-based Viavi Solutions signed a deal to buy its high speed ethernet and network security business from Keysight Technologies for $410m and an additional $15m to be paid at closing.
Shell gushed higher following a Wall Street Journal report the oil giant is mulling a sale of its chemicals assets in Europe and the US.
On the downside, Bunzl lost ground after full-year results.
Market Movers
FTSE 100 (UKX) 8,844.20 0.39%
FTSE 250 (MCX) 20,384.39 0.29%
techMARK (TASX) 4,841.52 1.66%
FTSE 100 - Risers
BAE Systems (BA.) 1,639.00p 16.53%
Rolls-Royce Holdings (RR.) 779.20p 4.73%
Berkeley Group Holdings (The) (BKG) 3,660.00p 1.67%
Flutter Entertainment (DI) (FLTR) 22,130.00p 1.61%
Shell (SHEL) 2,666.50p 1.16%
Melrose Industries (MRO) 648.00p 1.09%
Alliance Witan (ALW) 1,272.00p 0.95%
IMI (IMI) 2,020.00p 0.90%
F&C Investment Trust (FCIT) 1,156.00p 0.87%
The Sage Group (SGE) 1,275.50p 0.83%
FTSE 100 - Fallers
Bunzl (BNZL) 3,202.00p -4.93%
Pearson (PSON) 1,333.00p -2.09%
National Grid (NG.) 961.20p -1.42%
Mondi (MNDI) 1,211.00p -1.34%
easyJet (EZJ) 498.80p -1.31%
BT Group (BT.A) 157.85p -1.22%
Barclays (BARC) 307.85p -1.11%
NATWEST GROUP (NWG) 473.60p -1.09%
International Consolidated Airlines Group SA (CDI) (IAG) 348.70p -1.02%
Severn Trent (SVT) 2,478.00p -1.00%
FTSE 250 - Risers
QinetiQ Group (QQ.) 441.00p 9.10%
Babcock International Group (BAB) 724.00p 7.98%
Wood Group (John) (WG.) 39.24p 5.83%
Chemring Group (CHG) 392.50p 5.09%
Elementis (ELM) 158.00p 4.64%
Rathbones Group (RAT) 1,666.00p 3.61%
Indivior (INDV) 724.00p 3.50%
Serco Group (SRP) 168.10p 2.88%
FirstGroup (FGP) 163.40p 2.32%
Spirent Communications (SPT) 189.60p 2.21%
FTSE 250 - Fallers
Ocado Group (OCDO) 247.40p -4.77%
Wizz Air Holdings (WIZZ) 1,602.00p -4.07%
NCC Group (NCC) 125.20p -3.99%
Senior (SNR) 155.80p -3.59%
Raspberry PI Holdings (RPI) 577.25p -2.98%
Aston Martin Lagonda Global Holdings (AML) 80.60p -2.77%
Urban Logistics Reit (SHED) 112.60p -2.60%
Ferrexpo (FXPO) 73.30p -1.87%
Man Group (EMG) 209.20p -1.78%
Oxford Nanopore Technologies (ONT) 110.60p -1.78%
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