Josh White Sharecast News

17 Feb, 2025 17:11 17 Feb, 2025 16:45

London close: Stocks finish higher as defence plays surge

dl city of london square mile financial district generic 05 — Sharecast / Olga Lioncat via Pexels

BAE Systems

1,584.00p

16:40 24/03/25

-0.72%

-11.50p

London equities ended higher on Monday in a subdued session, with the absence of US trading due to the Presidents’ Day holiday keeping volumes lower as defence stocks led gains amid growing expectations of increased military spending.

Aerospace and Defence

15,441.83

16:59 24/03/25

-0.92%

-142.95

Assura

47.04p

16:40 24/03/25

0.30%

0.14p

Banks

5,719.96

16:59 24/03/25

1.17%

66.09

Barclays

303.60p

16:54 24/03/25

2.07%

6.15p

Chemring Group

375.00p

16:44 24/03/25

1.49%

5.50p

Ferrexpo

64.40p

16:39 24/03/25

1.58%

1.00p

Financial Services

17,505.28

16:59 24/03/25

-0.20%

-35.13

FTSE 100

8,638.01

16:54 24/03/25

n/a

FTSE 250

19,922.43

17:05 24/03/25

n/a

FTSE 350

4,714.08

16:59 24/03/25

n/a

FTSE All-Share

4,662.85

17:09 24/03/25

n/a

Health Care Equipment & Services

8,230.55

16:59 24/03/25

-0.57%

-47.52

Industrial Metals & Mining

5,603.92

16:59 24/03/25

1.64%

90.22

Mony Group

201.80p

16:40 24/03/25

0.70%

1.40p

Oil Equipment, Services & Distribution

4,928.34

16:30 20/03/25

0.00%

0.00

QinetiQ Group

378.40p

17:05 24/03/25

1.39%

5.20p

Rolls-Royce Holdings

790.00p

16:44 24/03/25

-1.32%

-10.60p

Software & Computer Services

2,521.38

16:59 24/03/25

-0.02%

-0.62

St James's Place

1,027.00p

16:44 24/03/25

0.10%

1.00p

Wood Group (John)

38.04p

17:09 24/03/25

-0.94%

-0.36p

The FTSE 100 index closed up 0.41% at 8,768.01 points, while the FTSE 250 added 0.12% to finish at 20,938.68 points.

In currency markets, sterling was last up 0.18% on the dollar to trade at $1.2609, as it gained 0.29% against the euro, changing hands at €1.2031.

“Despite US investors being absent due to their Presidents' Day holiday, European stock indices continue to surge higher,” said IG senior technical analyst Axel Rudolph.

“The Italian stock index rallied by over a percentage point with the German DAX 40 close on its heels, led by defence sector gains and making a new record high.

“The eurozone trade surplus topping forecasts and hopes of an end to the Russia-Ukraine war buoyed sentiment despite Germany's yields surging on defence spending plans.”

Rudolph noted that crude oil prices were steadying amid hopes of Russia-Ukraine peace talks between US president Donald Trump and his Russian counterpart Vladimir Putin.

“These could ease sanctions and boost oil supply. Gold and silver prices also advanced but the price of copper continued to come off last week's nine-month high and dropped by over a percent.”

UK house price growth slows, consumer confidence modestly improves

In economic news, UK house price growth slowed in February as sellers tempered expectations ahead of the stamp duty deadline.

According to property marketing portal Rightmove, property prices rose 0.5% on the month, down from January’s 1.7% increase, while annual growth eased to 1.4% from 1.8%.

The average asking price climbed to £367,994, but heightened competition and an abundance of available homes have constrained pricing power.

Rightmove said the number of properties per estate agency branch remained at a decade high, limiting sellers' ability to push for higher valuations.

“New sellers are showing some pricing restraint after a fast start to the year, being mindful of both the high level of seller competition, and in England also of the looming stamp duty deadline and extra costs for some buyers,” said Colleen Babcock, property expert at Rightmove.

“Agents report that some of the steam is coming out of new sellers’ price expectations to fit the changing market conditions, which is a sensible reaction to attract buyer interest, and it will also help to support activity levels.

“The upcoming stamp duty deadline in England remains a key talking point, and while some movers may not be affected at all, others will be more severely impacted.”

Consumer confidence meanwhile showed modest improvement following recent interest rate cuts, but remained weak according to fresh data.

The S&P Global UK consumer sentiment index rose to 45.4 in February, recovering from January’s 12-month low of 43.6.

Despite the boost from lower borrowing costs, household financial outlooks remain fragile, with the index still near its lowest levels in 10 months.

The Bank of England’s February rate cut to 4.5%, following a previous reduction in November, contributed to optimism among mortgage holders, but broader economic concerns persisted.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said confidence “remains in the doldrums" compared with the strong uptick last year before the autumn budget and gloomy government rhetoric dampened sentiment.”

“Households remain worried about their finances, with savings falling and income from employment showing the second weakest rise since June 2024,” Williamson said.

“Job market worries also remain widespread, with February seeing job insecurity prevail for a second month running, contrasting sharply with the record level of job security recorded in the middle of last year.”

Employer sentiment, however, deteriorated sharply.

A survey by the Chartered Institute of Personnel and Development (CIPD) revealed that hiring confidence has declined, while redundancy plans have surged to their highest level in a decade outside of the pandemic.

Concerns over rising employment costs, particularly the upcoming increases in National Insurance and the National Minimum Wage, had prompted nearly one-third of affected businesses to consider job cuts or hiring freezes.

The retail and hospitality sectors saw particularly sharp declines in hiring confidence, while overall redundancies were expected to rise, with 25% of employers planning job cuts in the first quarter, up from 21% last quarter.

“These are the most significant downward changes in employer sentiment we’ve seen in the last 10 years, outside of the pandemic,” said CIPD chief executive Peter Cheese.

“Employer confidence has been impacted by planned changes to employment costs, and employment indicators are heading in the wrong direction.

“Businesses have had time to digest these impending changes, with many now planning to reduce headcount, raise prices and cut investment in workforce training.”

Bank of England governor Andrew Bailey meanwhile downplayed last week’s better-than-expected GDP data, emphasising that the UK economy remained sluggish.

GDP edged up 0.1% in the fourth quarter, following stagnation in the previous quarter, but Bailey said in an interview with BusinessLive that it did not alter the broader picture of weak growth.

While inflation was expected to accelerate to 3.7% later this year due to rising utility costs, Bailey noted that disinflation remains a gradual process, with economic activity showing little momentum since mid-2024.

Beyond the UK, Bundesbank president Joachim Nagel warned that US protectionist trade policies could severely impact Germany’s export-driven economy.

Speaking in Frankfurt, Nagel cautioned that tariff increases and policy shifts in Washington could reduce German GDP by up to 1.5 percentage points by 2027.

He also predicted that such measures would dampen economic activity in the US itself, leading to higher inflation and potential monetary tightening.

Nagel stressed that protectionism would result in economic losses across all affected countries, warning that heightened uncertainty posed a further drag on global trade.

Defence stocks on the rise, Wood Group slump continues

On London’s equity markets, defence stocks were in focus, with BAE Systems jumping 8.96% and Rolls-Royce climbing 1.73% after prime minister Keir Starmer signalled potential UK troop deployments to Ukraine if a peace deal was secured.

Other defence firms followed suit, with QinetiQ rising 6.33% and Chemring advancing 9.05%.

Ukraine-based iron ore miner Ferrexpo was among the top gainers, surging 12.86% amid speculation that a Russia-Ukraine peace agreement could stabilise the region and improve demand prospects.

Property investor Assura soared 8.97% after confirming that it had rejected four takeover proposals from US private equity firm KKR, with the most recent bid valuing the company at £1.56bn.

MONY Group gained 4.63% after the Moneysupermarket owner reported a strong rise in full-year profits and announced a £30m share buyback programme.

Meanwhile, Barclays rose 3.33%, extending gains from last week’s well-received earnings report.

St James’s Place added 2.81% after Citi raised its price target on the wealth manager’s shares to 1,280p from 1,010p.

The bank reaffirmed its ‘buy’ rating, citing higher-than-expected fund inflows and a 10% increase in longer-term earnings estimates.

On the downside, Wood Group slumped 10.55% as the engineering firm continued to struggle following a weak trading update last Friday.

The company warned of disappointing fourth-quarter performance and projected negative free cash flow for 2025, prompting further investor caution.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX)8,768.010.41%
FTSE 250 (MCX)20,938.680.12%
techMARK (TASX)4,781.140.62%

FTSE 100 - Risers

BAE Systems (BA.)1,338.00p8.96%
Schroders (SDR)384.80p3.55%
Barclays (BARC)304.40p3.33%
St James's Place (STJ)1,133.00p2.81%
NATWEST GROUP (NWG)439.00p2.55%
Haleon (HLN)394.00p2.52%
Coca-Cola HBC AG (CDI) (CCH)3,262.00p2.26%
Reckitt Benckiser Group (RKT)5,324.00p2.07%
Entain (ENT)759.40p2.02%
Melrose Industries (MRO)643.40p1.80%