The FTSE 100 opened lower as global markets reacted to escalating geopolitical tensions triggered by U.S. President Donald Trump’s latest actions on the international stage. Investor sentiment weakened after reports of Russian-flagged vessels being seized, the apprehension of Venezuelan leader Nicolás Maduro, and renewed threats aimed at Greenland, raising fears of further global instability.
London’s blue-chip index fell as much as 0.5% to 9,995.91 in early trading, slipping back below the psychologically important 10,000 mark. The FTSE 250, which tracks mid-cap companies more exposed to the domestic economy, also declined by up to 0.3% to 22,815.99.
Defence Stocks Rally on Higher Military Spending Expectations
While broader markets struggled, UK defence stocks surged, buoyed by expectations of a sharp rise in U.S. military spending. Trump said he plans to lift the American defence budget by 50%, from $1tn to $1.5tn, a move that investors believe could significantly benefit defence contractors.
BAE Systems jumped around 6% at the open, leading gains on the FTSE 100. Other defence names also advanced, with Babcock rising 2.3% and Chemring gaining 3.2%, reflecting optimism over stronger long-term order books.
Marks & Spencer Sees Strong Food Sales but Clothing Remains Under Pressure
Marks & Spencer (M&S) reported a solid performance in its food business over the Christmas period, helping to offset ongoing weakness elsewhere in the group. Food sales rose 6.6% in the 13 weeks to 27 December, as shoppers continued to trade up on groceries.
However, M&S said its clothing, home and beauty division remained under pressure, with sales in that segment falling 2.5%, partly due to lingering disruption from last year’s cyber-attack.
Tesco Raises Profit Forecast After “Strong Christmas”
Tesco delivered one of the most upbeat updates of the day, lifting its profit outlook following strong festive trading. Chief executive Ken Murphy said he was “delighted with the strong Christmas we delivered for our customers”.
UK sales rose 3.2% in the six weeks to 3 January and 3.9% over the prior 13 weeks. Tesco’s premium Finest range performed particularly well, with sales up 13%, while party food sales jumped 22%. The retailer now expects annual adjusted operating profit to land at the upper end of its £2.9bn–£3.1bn guidance range, offering a boost to investor confidence.
Greggs Warns Trading Conditions Remain Challenging
Bakery chain Greggs struck a more cautious tone, telling shareholders that market conditions remain “challenging”. Despite this, the company said it continues to outperform competitors, reporting 2.9% like-for-like sales growth at company-managed stores in the fourth quarter.
Primark Owner ABF Shares Slide on Profit Warning
Shares in Associated British Foods (ABF) fell by more than 10% after the company issued a surprise profit warning. ABF said sales growth at its Primark chain had fallen below expectations in the final 16 weeks of the year, with weaker demand in both Europe and the United States weighing on performance.
