Market Gains After Early Losses
British markets rebounded on Tuesday, with the FTSE 100 up 0.6%, Germany’s DAX rising 0.6%, and France’s CAC 40 gaining 0.3%. Sterling slipped 0.5% to $1.3370 amid investor focus on global geopolitics and domestic policy changes.
Defense Stocks Surge on Government Moves
London-listed defense stocks rallied after Andy Burnham appointed former defense secretary John Healey as Chancellor. Healey’s expected push for higher military spending boosted investor sentiment, coinciding with Canada’s potential involvement in the GCAP stealth fighter programme.
Geopolitical Tensions Impact Markets
Ongoing US-Iran conflict entered its 10th day. Iranian attacks in Bahrain and Jordan, along with intercepted missiles and drones, highlighted continued risk in the Strait of Hormuz. Proposals for a 10-day ceasefire by Qatar, Egypt, and Pakistan aim to reopen the vital shipping route.
UK Fiscal Policy and Economic Data
Burnham announced the removal of VAT on domestic electricity bills starting October 1, funded by cancelling the £1.8bn Digital ID programme. UK unemployment fell to 4.9%, and public borrowing decreased by £7.9 billion YoY. Gilt yields rose on the fiscal announcement.
Energy and Commodities
Brent crude rose to $90.34 per barrel, WTI to $83.44, while gold jumped to $4,063.20 an ounce. Oil and precious metals responded to heightened geopolitical risk and expectations for ongoing supply disruptions.
Corporate Updates
- Mitie Group saw Q1 revenue rise 10% and agreed to a £3.1bn takeover by OCS Group.
- MONY Group reported record first-half revenue, supported by insurance and home services growth.
- Compass Group posted 7.1% Q3 organic revenue growth, staying on track for its fifth consecutive year of 4-5% net new business growth.
- Wickes Group reported Q2 revenue growth despite deflationary pressures, maintaining its 2026 profit outlook.
