Defence firms and housebuilders rise amid Russia tensions and stamp duty cuts

·3-min read
BAE Systems, which makes submarines for the Royal Navy, saw its shares jump on Wednesday (HMS Anson/PA) (PA Wire)
BAE Systems, which makes submarines for the Royal Navy, saw its shares jump on Wednesday (HMS Anson/PA) (PA Wire)

The FTSE 100 notched up its first strong performance in more than a week as a mix of Russia’s latest escalation in its war with Ukraine and reports of a stamp duty cut pushed up some of the index’s members.

By the end of the day defence manufacturer BAE systems was one of the top performers on the FTSE.

It came after Russian president Vladimir Putin announced he would mobilise 300,000 reservists to try to turn around a war which has turned against him in recent weeks.

Experts question how much impact the thousands of poorly trained troops will have, and whether Russia will even be able to equip them properly.

We’ve seen gains in defence stocks in the wake of this morning’s threats by Putin, with BAE Systems near the top of the FTSE 100, while Chemring and QinetiQ are also higher

CMC Markets analyst Michael Hewson

But the possibility of an escalation clearly seemed to push investors towards defence companies, said CMC Markets analyst Michael Hewson.

“We’ve … seen gains in defence stocks in the wake of this morning’s threats by Putin, with BAE Systems near the top of the FTSE 100, while Chemring and QinetiQ are also higher,” he said.

Mr Hewson added: “House builders have received a lift on reports that we might see a cut in stamp duty later this week when the mini-budget is announced, with Persimmon, Taylor Wimpey and Barratt Developments rebounding modestly after yesterday’s steep losses.

“Today’s rebound is still modest compared to the losses we’ve already seen this year, as well as this week.

“Ultimately the devil will be in the detail, however, even if it does come to pass, the other side of that is that with interest rates set to rise as well as the rising cost of living it’s unlikely to be a game changer.”

By the end of the day the FTSE 100 had gained 44.98 points, a rise of 0.6% which left it at 7,237.64.

In Europe the German Dax closed up 0.8%, and France’s Cac 40 rose 0.9%.

On Wall Street the S&P 400 and Dow Jones had both gained around half a per cent shortly after markets closed in Europe.

Sterling was flat against both the euro and the dollar, at 1.133 dollars to the pound and 1.147 euros.

In company news, retailer JD Sports will pay £5.5 million to its former boss Peter Cowgill who stepped down in May.

The former executive chairman helped land the business with a £4.3 million fine for sharing sensitive information with Footasylum during an attempted merger which was eventually blocked.

JD said it had reached a deal with Mr Cowgill over the terms of his departure. Shares dipped 0.5%.

France’s Schneider Electric will take over software company Aveva in a deal valuing the firm at £9.5 billion.

Shares in the business rose by 1.8% to just over the £31 offer price on Wednesday. Schneider already owns around 60% of shares in the FTSE 100 company.

Aveva has over 6,400 employees.

The biggest risers on the FTSE 100 were Hargreaves Lansdown, up 49.2p to 892.8p, Persimmon, up 62.5p to 1,399.5p, BAE Systems, up 31.6p to 803.4p, Schroders, up 17p to 444.9p, and Halma, up 70p to 2,105p.

The biggest fallers on the FTSE 100 were Ocado, down 31.4p to 575p, Intercontinental Hotels Group, down 156p to 4,489p, IAG, down 4p to 104.8p, Whitbread, down 60p to 2,560p, and Rolls-Royce, down 2p to 74.32p.