Josh White Sharecast News

25 Feb, 2025 17:20 25 Feb, 2025 16:45

London close: Stocks mixed as Starmer announces defence spending boost

dl city of london square mile financial district generic 14 — Sharecast / Som Thapa Magar via Pexels

Smith & Nephew

1,071.00p

16:45 28/03/25

0.37%

4.00p

London stocks ended Tuesday’s session mixed after a volatile day of trading, as investors reacted to prime minister Keir Starmer’s announcement of cuts to international aid to fund increased defence spending.

Aerospace and Defence

15,143.90

17:14 28/03/25

-2.50%

-387.91

BAE Systems

1,564.50p

17:15 28/03/25

-1.26%

-20.00p

Banks

5,682.34

17:14 28/03/25

-1.36%

-78.07

Barclays

293.50p

17:15 28/03/25

-3.29%

-10.00p

Chemicals

6,539.75

17:14 28/03/25

1.21%

78.38

Cmc Markets

214.00p

16:39 28/03/25

0.94%

2.00p

Croda International

2,960.00p

17:15 28/03/25

2.35%

68.00p

Financial Services

17,956.20

17:14 28/03/25

1.75%

309.31

FTSE 100

8,658.85

17:14 28/03/25

n/a

FTSE 250

19,864.98

17:14 28/03/25

n/a

FTSE 350

4,722.51

17:14 28/03/25

n/a

FTSE All-Share

4,671.27

16:39 28/03/25

n/a

Health Care Equipment & Services

8,487.16

17:14 28/03/25

3.84%

313.63

HSBC Holdings

885.40p

16:39 28/03/25

-0.90%

-8.00p

Lion Finance Group

5,560.00p

17:15 28/03/25

-0.71%

-40.00p

Lloyds Banking Group

73.40p

17:14 28/03/25

-0.81%

-0.60p

NATWEST GROUP

459.10p

17:04 28/03/25

-1.61%

-7.50p

Personal Goods

12,585.25

17:14 28/03/25

-2.00%

-257.49

Real Estate Investment Trusts

2,029.06

17:14 28/03/25

1.87%

37.23

Rolls-Royce Holdings

771.20p

17:15 28/03/25

-3.24%

-25.80p

Standard Chartered

1,145.50p

16:35 28/03/25

-1.38%

-16.00p

TBC Bank Group

4,255.00p

16:45 28/03/25

-1.62%

-70.00p

Unilever

4,587.00p

17:13 28/03/25

1.53%

69.00p

Unite Group

814.50p

16:35 28/03/25

1.81%

14.50p

The FTSE 100 index edged up 0.11% to close at 8,668.67 points, supported by gains in defence stocks, while the FTSE 250 slipped 0.18% to 20,448.28 points.

In currency markets, sterling was last up 0.19% on the dollar to trade at $1.2649, while it weakened 0.09% against the euro, changing hands at €1.2051.

“The drop in bitcoin appears to be prompting the beginnings of a broader selloff in other assets, as oil prices fall 2% and Wall Street gives up its fleeting opening gains,” noted IG chief market analyst Chris Beauchamp.

“More tariff talk and signs of further rupture between the US and Canada piles fresh worries on investors, and as the VIX hits a fresh one month high it seems we might be on the cusp of a full-blown bout of market volatility.”

Beauchamp quipped that the atmosphere “remains febrile” across the globe.

“The UK’s move to ramp up the pace of defence spending is being seen as symptomatic of wider moves across the continent.

“While a boon for defence stocks, notably BAE and Rolls-Royce, the worsening geopolitical situation will inevitably rebound on equities, and expensive US stocks are sure to be caught in the middle of any wildfire outbreak of selling.”

Starmer announces boost to UK defence spending, foreign aid cuts

At the top of the agenda on Tuesday afternoon was news that the UK was cutting its international aid budget to boost defence spending, with prime minister Keir Starmer announcing plans to raise military expenditure to 2.5% of GDP from 2027.

Speaking in the House of Commons ahead of a visit to Washington to meet US president Donald Trump, Starmer described the increase as the largest sustained rise in defence spending since the Cold War.

However, he acknowledged that the move would require difficult decisions, including reducing the aid budget to 0.3% of GDP from the current 0.5%.

The shift would free up an additional £13.4bn per year for defence.

While Starmer emphasised that Britain would maintain a significant role in humanitarian efforts, including in Sudan, Ukraine, and Gaza, he admitted that the cuts represented a setback.

He said the government aimed to restore development spending in the future, but insisted that national security needed to take priority in the current geopolitical climate.

The PM also outlined a longer-term goal to raise defence spending to 3% of GDP, contingent on economic conditions.

Meanwhile, Germany’s economy contracted by 0.2% in the final quarter of 2024, confirming earlier estimates from the Federal Statistics Office.

The decline was driven by a sharp 2.2% drop in exports, marking the steepest fall since the second quarter of 2020.

Goods exports were hit particularly hard, falling 3.4%, while imports of goods declined by 1%.

However, overall imports edged up by 0.5% due to a 4.2% rise in services imports.

For the full year, Germany’s economy shrank by 0.2%, reflecting broader economic struggles despite modest growth of 0.1% in the third quarter.

Defence, finance plays in the green; Unilever down on CEO departure

On London’s equity markets, Smith & Nephew jumped 5.5% after its full-year profit and revenue exceeded downgraded expectations.

A rebound in its US knee and hip implant business helped offset ongoing challenges in China.

Defence stocks also performed strongly, with BAE Systems climbing 4.18% as optimism over increased European military spending continued to fuel its rally.

The company had gained over 15% in the past two weeks, buoyed by record orders and expectations of more than £30bn in sales for 2025.

Rolls-Royce advanced 1.19%, benefiting from the same sentiment.

Financials were also among the top gainers.

NatWest rose 2.55%, HSBC gained 2.48%, Standard Chartered added 2.09%, Lloyds climbed 1.94%, and Barclays edged up 0.94%, reflecting broader strength in the banking sector.

Lion Finance Group, formerly Bank of Georgia, jumped 1.69% after increasing its dividend and expanding its share buyback programme on the back of strong 2024 results.

TBC Bank also saw gains, finishing the day ahead 2.78%.

Unite Group added 2.22% after reporting a 16% rise in adjusted earnings for 2024, driven by strong rental growth and high occupancy rates.

Specialty chemicals firm Croda International finished marginally higher, up 0.06%, following a volatile session.

The company met profit expectations despite weaker annual sales and margins, with plans for £25m in cost savings this year.

On the downside, Unilever slid 1.27% after announcing that chief executive officer Hein Schumacher would step down on 1 March, departing fully by the end of May.

He would be replaced by finance chief Fernando Fernandez.

“Markets typically flinch at abrupt leadership shifts but [Fernandez’s] deep experience, and a clear mandate to push change with urgency, signal a bold move to accelerate the final stretch of Unilever’s turnaround,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.

“With Fernandez poised to build on the groundwork already laid, this unexpected transition might be the spark that helps deliver a new version of Unilever that investors have long been waiting for.”

Meanwhile, CMC Markets dropped 6.19% after revealing that chief financial officer Albert Soleiman would leave the company immediately, though he will stay on for a transitional period.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX)8,668.670.11%
FTSE 250 (MCX)20,448.28-0.18%
techMARK (TASX)4,733.810.43%

FTSE 100 - Risers

Smith & Nephew (SN.)1,107.50p6.13%
BAE Systems (BA.)1,366.00p4.67%
HSBC Holdings (HSBA)899.50p2.48%
NATWEST GROUP (NWG)453.30p2.16%
GSK (GSK)1,483.50p2.13%
Standard Chartered (STAN)1,201.00p2.08%
Lloyds Banking Group (LLOY)68.62p1.93%
Hiscox Limited (DI) (HSX)1,066.00p1.72%
Rolls-Royce Holdings (RR.)615.00p1.45%
AstraZeneca (AZN)11,932.00p1.36%