London stock prices closed higher on Tuesday as new Chancellor John Healey reiterated his commitment to fiscal discipline and defence stocks climbed. The FTSE 100 ended up 61.15 points, 0.6%, at 10,585.91. The FTSE 250 rose 211.69 points, 0.9%, to 23,752.40, while the AIM all-share index added 8.24 points, 1.1%, closing at 766.13.
European and Currency Markets
In Europe, the CAC 40 in Paris closed up 0.3%, and the DAX 40 in Frankfurt ended 0.7% higher. The pound fell to $1.3375 from $1.3418 at Monday's equities close. Against the euro, sterling was lower at €1.1720 from €1.1755. The euro slipped to $1.1408 from $1.1441, while the dollar rose to ¥162.97 from ¥162.56.
Political Developments
Prime Minister Andy Burnham told ministers he would lead a “cost-of-living Government” after announcing an £850 million tax cut on electricity bills. Using his first Cabinet meeting, Burnham said ministers must give people “a sense that help is coming” and vowed to show how policies would be paid for.
AJ Bell analyst Russ Mould commented: “Andy Burnham is now confirmed as the nation’s seventh prime minister in 10 years, with John Healey as our ninth Chancellor of the Exchequer in the same time span, and the electorate and financial markets alike now wait to see what policy initiatives may follow.”
Chancellor John Healey, addressing Treasury staff for the first time, said he wanted to build “new hope” for Britain. He promised fiscal control as his “first duty” and the “bedrock of economic stability”, pledging “principles not political buzzwords” and a “new era of devolution and public control”.
Defence Stocks and Middle East Tensions
Defence stocks rose after Healey’s appointment. Healey, former defence secretary under Sir Keir Starmer, left that role after deeming defence investment insufficient. Babcock International shares jumped 7.6%, and BAE Systems gained 1.8%.
Iran intensified attacks in the Middle East on Tuesday, two weeks after resuming war with the US, with sirens in Bahrain and Jordan intercepting missiles and drones. Iran’s Yemeni allies, the Houthis, declared a blockade of Saudi Arabia’s ports, threatening energy markets after Iran blockaded the Strait of Hormuz. Brent oil rose to $91.36 a barrel from $88.07.
US Markets and Bonds
US stocks were higher: the Dow Jones Industrial Average rose 0.7%, the S&P 500 gained 0.8%, and the Nasdaq Composite added 1.3%. The yield on the US 10-year Treasury widened to 4.63% from 4.59%, and the 30-year yield stretched to 5.13% from 5.11%.
Miners and Gold
Mining shares gained. Antofagasta rose 5.8%, Fresnillo climbed 4.4%, and Endeavour Mining finished up 3.8%. Gold climbed to $4,077.93 an ounce from $4,011.08.
Mergers and Acquisitions
Segro ended down 3.4% after rejecting another Prologis offer, which valued the FTSE 100 listing at 993 pence per share, or £13.5 billion total. Prologis said the defence relied on “unrealistic risk assessments and assumptions”.
Mitie shares jumped 39% after agreeing to a £3.1 billion takeover by OCS Group, valuing the company at 221.6 pence per share, a 45% premium to Monday's close. Russ Mould noted M&A activity in the UK remains strong.
Ocado shares rose 3.1% after announcing a new customer fulfilment centre agreement with an unnamed European retailer, set to go live in financial 2028. Financial terms were undisclosed.
AIM and Other Movers
IQE shares surged 30% after raising revenue guidance, citing first-half revenue of at least £64 million and strong demand across core segments. CEO Jutta Meier said leadership in indium phosphide ensures critical supply chain embedding.
London Stock Exchange Group unveiled plans for a 24-hour trading venue, London Stock Exchange 24, operating Monday to Friday from 5pm to 7.50am. Shares in LSEG ended 2.4% lower.
FTSE 100 Risers and Fallers
Biggest risers: Babcock International up 79.00p to 1,116.50p, Antofagasta up 202.00p to 3,667.00p, Marks & Spencer up 17.60p to 397.50p, Fresnillo up 109.00p to 2,566.00p, Endeavour Mining up 130.00p to 3,554.00p.
Biggest fallers: Segro down 30.29p to 870.51p, Reckitt Benckiser down 130.00p to 4,938.00p, Relx down 64.00p to 2,454.00p, Autotrader down 12.20p to 490.00p, London Stock Exchange Group down 210.00p to 8,634.00p.
Upcoming Events
On Wednesday, UK inflation data is due at 7am, and trading statements are expected from Fresnillo, Greencore, JD Wetherspoon, Liontrust Asset Management, as well as half-year results from PensionBee and Reach.
