London midday: FTSE boosted by defence shares
By Michele Maatouk
Date: Monday 03 Mar 2025
(Sharecast News) - London stocks were still in the black by midday on Monday, with defence names surging on the prospect of increased spending, as investors digested a raft of UK data releases.
The FTSE 100 was up 0.6% at 8,860.39, having hit an all-time high.
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."
A survey out earlier showed the downturn in the UK's manufacturing sector deepened in February, with firms cutting staff at the steepest pace since May 2020.
The S&P Global purchasing managers' index for the sector fell to a 14-month low of 46.9 from 48.3 in January. This was above the flash estimate of 46.4 but remained below the 50.0 mark that separates contraction from expansion for the fifth month in a row.
The survey found that manufacturers scaled back production in response to lower new order intakes, subdued client confidence - at both businesses and consumers - and supply chain issues. Companies faced weaker demand from both domestic and overseas clients.
On homes shores, the market was downbeat mainly due to a combination of rising cost pressures, an associated lack of willingness to spend among customers and the impact of policy changes announced in last year's Autumn Budget.
Separate figures from the Bank of England showed the total amount borrowed for mortgages reached its highest in more than two years in January, while consumer credit levels hit a one-year high.
Net mortgage borrowing by individuals totalled £4.2bn in January, up £0.9bn from December and the highest level since September 2022.
Compared with the year before, net mortgage lending was 1.8% higher, up from annual growth of 1.5% in December and continuing the upward trend seen since April 2024.
Net mortgage approvals for house purchases, which economists track to predict the future housing market situation, dipped by 300 to 66,200, but still remained close to the highest levels seen since August 2022. Analysts had predicted a larger decline to 65,650, from December's print of 66,500.
However, approvals for remortgaging jumped 2,200 to 32,900 after falling for the previous two months.
Meanwhile, net consumer credit borrowing by individuals totalled £1.7bn in January, up from £1.1bn the previous month and the highest since January 2024. Net borrowing through credit cards was the main driver of the increase, growing to £1.1bn from £0.4bn.
Market participants were also mulling the latest manufacturing survey out of China, which showed that activity 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.
Elsewhere, crypto prices 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 of European leaders in London to discuss the Ukraine conflict, 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 slumped after full-year results.
Market Movers
FTSE 100 (UKX) 8,860.39 0.57%
FTSE 250 (MCX) 20,336.17 0.05%
techMARK (TASX) 4,836.58 1.56%
FTSE 100 - Risers
BAE Systems (BA.) 1,601.00p 13.83%
Rolls-Royce Holdings (RR.) 783.20p 5.27%
IMI (IMI) 2,074.00p 3.60%
Antofagasta (ANTO) 1,782.00p 2.80%
Intermediate Capital Group (ICG) 2,338.00p 2.45%
Anglo American (AAL) 2,389.50p 2.29%
St James's Place (STJ) 1,079.00p 1.98%
Glencore (GLEN) 325.25p 1.91%
Haleon (HLN) 405.40p 1.76%
Flutter Entertainment (DI) (FLTR) 22,120.00p 1.56%
FTSE 100 - Fallers
Bunzl (BNZL) 3,098.00p -8.02%
National Grid (NG.) 949.40p -2.63%
Severn Trent (SVT) 2,440.00p -2.52%
United Utilities Group (UU.) 963.00p -1.75%
British Land Company (BLND) 354.20p -1.72%
International Consolidated Airlines Group SA (CDI) (IAG) 346.30p -1.70%
Sainsbury (J) (SBRY) 254.40p -1.62%
Pearson (PSON) 1,339.50p -1.62%
Airtel Africa (AAF) 140.30p -1.61%
Taylor Wimpey (TW.) 111.60p -1.54%
FTSE 250 - Risers
QinetiQ Group (QQ.) 440.80p 9.05%
Babcock International Group (BAB) 722.50p 7.76%
Wood Group (John) (WG.) 39.50p 6.53%
Indivior (INDV) 735.50p 5.15%
FirstGroup (FGP) 167.80p 5.07%
Ferrexpo (FXPO) 78.40p 4.95%
Chemring Group (CHG) 389.50p 4.28%
Senior (SNR) 166.40p 2.97%
Me Group International (MEGP) 197.80p 2.91%
Mobico Group (MCG) 70.10p 2.86%
FTSE 250 - Fallers
Baltic Classifieds Group (BCG) 312.50p -9.16%
Spectris (SXS) 2,740.00p -4.79%
Oxford Nanopore Technologies (ONT) 107.60p -4.44%
Raspberry PI Holdings (RPI) 570.25p -4.16%
Ocado Group (OCDO) 249.00p -4.16%
Savills (SVS) 1,008.00p -3.08%
Wizz Air Holdings (WIZZ) 1,619.00p -3.05%
Man Group (EMG) 207.60p -2.54%
Primary Health Properties (PHP) 91.75p -2.39%
Greggs (GRG) 2,054.00p -2.28%
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