The FTSE 100 hit an all-time record intraday high on Monday as defence-related stocks helped power the index higher amid positioning for higher defence spending by European countries.
The disastrous meeting between Ukrainian President Zelenskyy and Donald Trump has been met with fresh pledges of military aid for Ukraine by the UK and other European countries, which are also expected to bolster their military spending.
From a market perspective, investors piled into defence stocks across Europe, with London-listed BAE Systems surging higher.
“The Footsie has surged into the green in a spurt of Monday motivation, with the index hitting a fresh record level,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Better prospects for China’s economy and the expectation of increased state spending on military capabilities are offsetting jitters about fraught geo-politics and US tariffs concerns,” Streeter continued.
“Defence contractors leading the charge higher, with BAE Systems up by more than 18% in early trade. The shocking clash between Trump, Vance and Zelensky has brought the need for Europe to increase collective security into sharp focus. A show of co-operation among leaders at the weekend in London has reinforced expectations that military budgets will swell in a new era of collaboration to counter the Russian threat.”
The composition of the FTSE 100 meant the index shrugged off any concerns about Trump tariffs due on Tuesday and rocketed to intraday records. Rolls Royce’s exposure to the defence sector helped its share rise 5%, extending this year’s gains to 38%.
BAE Systems and Rolls Royce are the FTSE 100’s best performers of 2025 to date. BAE Systems shares have gained more than 39% this year and are set to close at an all-time high on Monday.
While US equities are feeling the pressure of Trump tariffs on Mexico, Canada, and Chine due to kick in on Tuesday, the FTSE 100 was enjoying the possible consequences of tariffs on copper, with miners rallying on the possibility of prices rises.
Antofagasta jumped more than 3% as Anglo American and Glencore rose over 2%.
Bunzl was the FTSE 100 top faller after profit before tax fell 3.6% in the year ended 31st December and the group said they were facing uncertainties. Shares were down 8.5% at the time of writing.
“Falling prices as we emerge from an inflationary period have been a headwind for Bunzl’s revenue growth and while this effect is beginning to wear off, underlying growth looks set to remain subdued,” said Russ Mould, investment director at AJ Bell.
“Bunzl typically pursues expansion through acquisitions so leaning on M&A is not unusual for the group, although the recently acquired catering outfit Nisbets had a tough 2024.
“Investors may have taken note of the uptick in net debt, although the company’s strong cash generation meant it still felt able to hike the dividend and unveil a major share buyback.”