A surge in defence shares catapulted Britain’s FTSE 100 to an all-time high, as investors responded to Europe’s renewed commitment to military spending. With geopolitical tensions driving policy shifts, aerospace and defence stocks soared, reflecting growing confidence in the sector’s long-term prospects.
Britain’s blue-chip FTSE 100 climbed 0.7%, setting a record closing high, while the midcap FTSE 250 advanced 0.3%. European leaders reaffirmed their pledge to bolster defence budgets, a move seen as a strategic response to geopolitical uncertainty and recent tensions between Ukrainian President Volodymyr Zelenskiy and former U.S. President Donald Trump. This commitment to self-reliance sent the FTSE 350 aerospace & defence index surging 8.1% to a new peak, accumulating over 25% gains this year.
BAE Systems emerged as the standout performer, rallying 14.6% to lead the FTSE 100, while Rolls-Royce Holdings followed with a 4.4% increase. The sector’s momentum was further fuelled by reports that Germany’s potential coalition government is considering a dedicated defence fund, reinforcing investor confidence in sustained military expenditure.
Elsewhere, Britain’s manufacturing sector painted a mixed picture. Factory job cuts accelerated at their fastest pace in nearly five years, yet optimism rebounded to a six-month high as businesses anticipated economic recovery. Meanwhile, gold prices climbed, boosting the FTSE 350 precious metal mining index by 1.6%, as investors sought safe-haven assets amid currency fluctuations and trade uncertainties.
Senior Plc saw an 8.5% uptick after revealing advanced negotiations for the sale of its aerostructures business, highlighting ongoing sector consolidation. Conversely, Bunzl tumbled 8.8% to its lowest level since August following a dip in annual profits, demonstrating the varied fortunes across UK equities.
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