FTSE 100 rebounds as defence stocks rally amid Middle East tensions

​​​Defence contractors lead FTSE 100 recovery

​The FTSE 100 has opened higher this morning, tracking a broader recovery across global equity markets as trade tensions show signs of easing. The index is benefiting from strong gains in defence-related stocks after reports emerged suggesting renewed ceasefire risks in the Middle East.

​Babcock, Rolls-Royce and BAE Systems are among the top risers in early trade. These companies typically see heightened investor interest during periods of geopolitical uncertainty, as defence spending tends to increase when conflicts escalate or diplomatic solutions falter.

​The rally in defence stocks highlights how quickly market sentiment can shift based on international developments. Traders are closely monitoring news from the region, with any escalation likely to provide further support to these heavyweight constituents.

​While the FTSE 100 has edged higher, the mid-cap FTSE 250 is underperforming despite the broader risk-on tone. This divergence suggests that domestic concerns are weighing more heavily on smaller companies compared to their internationally-focused blue-chip counterparts.

​B&M European Value Retail suffers dramatic selloff

​Discount retailer B&M European Value Retail has plunged more than 17% in morning trade, making it the worst performer on the London market. The sharp decline follows the company's second profit warning in just one month, compounded by news that its chief financial officer plans to leave the business.

​The double blow has shaken investor confidence in the budget retail chain. B&M had previously been viewed as relatively resilient during the cost-of-living crisis, with shoppers trading down to discount stores as household budgets came under pressure.

​However, the repeated profit warnings suggest the retailer is facing more significant challenges than initially anticipated. These could include rising operating costs, increased competition from rivals, or weaker consumer demand despite its value positioning.

​The CFO's planned departure adds another layer of uncertainty for shareholders. Leadership changes at senior financial positions often trigger concerns about internal issues or strategic disagreements, particularly when they coincide with deteriorating trading conditions.

​Housebuilders slide on softer property market data

​Housebuilding stocks have weakened in early trade following fresh data from property portal Rightmove showing slower growth in asking prices and softer demand indicators. Barratt Developments, Persimmon and Berkeley Group are among the fallers in the construction sector.

​The property market has been under pressure as higher mortgage rates continue to weigh on affordability. While rates have come down from their peaks, they remain elevated compared to the ultra-low levels seen in recent years, dampening buyer enthusiasm.

​Rightmove's latest report suggests sellers are becoming more cautious about pricing. Slower asking-price growth typically indicates that vendors recognise they need to price more competitively to attract buyers in a market where demand has softened considerably.

​The weakness in housebuilders reflects broader concerns about the UK housing market's trajectory. With interest rates expected to remain higher for longer, the sector faces headwinds that could persist well into next year, potentially limiting construction activity and margins.

​Sterling steadies after erasing early losses

​The British pound has stabilised after reversing earlier declines, trading little changed above $1.34 against the US dollar. Sterling's resilience comes as the US dollar steadied following recent volatility driven by shifting expectations around Federal Reserve (Fed) policy.

​Currency markets have been particularly sensitive to economic data releases and central bank communications. The pound's ability to hold above the psychologically important $1.34 level suggests traders maintain a relatively constructive view on UK assets despite domestic economic challenges.

​UK gilt yields have firmed during the session, with British government bonds outperforming their European counterparts. This relative strength comes as French debt faced pressure following Standard & Poor's decision to downgrade France's sovereign credit rating.

​The divergence in European bond markets highlights how fiscal concerns are weighing differently across the continent. Britain's relatively stable fiscal position compared to some eurozone nations may be providing modest support to sterling and UK government debt.

​Pension funds launch Sterling 20 infrastructure initiative

​Major UK insurers and pension providers have unveiled the "Sterling 20" initiative, aimed at channelling capital into infrastructure projects and fast-growth sectors including artificial intelligence. The move represents a significant effort to direct domestic institutional investment toward productive assets.

​The initiative comes amid ongoing discussions about pension fund reform and how Britain can better deploy its substantial pool of retirement savings. Critics have long argued that UK pension schemes invest too conservatively, missing opportunities in higher-growth areas.

​Infrastructure investment has gained prominence as governments seek private capital to fund major projects. The inclusion of AI and other growth sectors suggests pension funds are willing to take on more risk in pursuit of higher returns for their members.

​Budget speculation continues to build ahead of November's fiscal statement, with talk of potential reforms to Individual Savings Accounts (ISA) and changes to stamp duty gaining traction. Any significant tax changes could have material implications for retail investors and property buyers.

​Chinese GDP data lifts sentiment in mining stocks

​Better-than-expected gross domestic product (GDP) figures from China have helped underpin positive sentiment in mining and commodity-related stocks. The data showed China's economy grew faster than forecasts, providing reassurance about demand from the world's largest consumer of raw materials.

​Mining stocks listed on the FTSE 100 tend to be particularly sensitive to Chinese economic indicators. Companies like Rio Tinto, Anglo American and Glencore derive substantial revenues from selling iron ore, copper and other commodities to Chinese buyers.

​However, some caution remains warranted despite the headline GDP beat. Softer domestic demand indicators within the Chinese data suggest the recovery may be uneven, with consumer spending and property markets still facing significant headwinds.

​The mixed signals from China's economy reflect the challenges facing policymakers in Beijing. While industrial production and exports remain relatively robust, getting consumers to spend more freely has proved difficult, potentially limiting the upside for commodity prices and related equities.

​How to trade FTSE 100 stocks

​If you want to gain exposure to individual FTSE 100 companies or the index itself, follow these steps:

1. ​Research the companies or sectors you're interested in trading, paying attention to their financial performance, market position and exposure to economic trends 
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