Market update: FTSE 100 flat but Rolls-Royce powers on, WH Smith down 5%
09:40 , Graeme EvansA fresh record for Rolls-Royce alongside fresh gains for Babcock International and BAE Systems today offset a lacklustre showing by the FTSE 100 index.
Rolls shares lifted 3% to as high as 983.2p after the Sunday Times reported that boss Tufan Erginbilgic has confirmed the company’s return to the $1.6 trillion market for short-haul aircraft engines.
The shares have added another 66% this year, while Babcock International has more than doubled in value and BAE Systems lifted by more than 60%.
The defence-focused pair today improved 14p to 1151p and 15.5p to 1877.5p respectively, while GKN Aerospace business Melrose Industries added 7p to 543p.
Other strong performers in an otherwise quiet session included Auto Trader, which cheered 11.6p to 832.8p.
The FTSE 100 index followed Friday’s 0.7% gain by drifting 8.70 points to 8790.21. That was despite a largely positive session in Asia, where the Nikkei 225 finished up 0.8% at a one-year high.
Blue-chip fallers included British Gas owner Centrica, which dropped 2% or 3.45p to 160.05p after JP Morgan removed its Overweight recommendation.
Marks & Spencer also dropped 4.2p to 352.9p and Barclays fell 3.85p to 334.7p.
The FTSE 250 index fell 22.19 points to 21,693.77, with WH Smith shares down 5% or 58p to 1071p after announcing new deal terms on its high street disposal.
The deal with Modella Capital completed today with gross proceeds of up to £40 million, down from £52 million when the deal was announced in March.
Consumer spending picks up, GDP unrevised
08:38 , Graeme EvansThe UK economy grew at the fastest pace for more than a year at the start of 2025, official figures have confirmed, as household spending helped drive the rebound.
The Office for National Statistics said gross domestic product rose by an unrevised 0.7% between January and March.
Household spending was revised up, from 0.2% to 0.4%, as the savings ratio fell for the first time in more than two years, to 10.9% over the quarter, as consumers dipped into their savings to spend.
Car and aerospace tariffs deal comes into force
08:30 , Graeme EvansTariff cuts for the automotive and aerospace sectors have come into force after Keir Starmer finalised parts of a deal for relief from US import taxes.
Car manufacturers exporting to the US will face a 10% tariff quota, down from 27.5%, while the aerospace sector will see a 10% levy removed entirely.
Talks are ongoing to secure 0% tariffs on core steel products from the UK.
The executive order signed by President Trump suggests the US wants assurances on the supply chains for UK steel intended for export, as well as on the “nature of ownership” of production facilities.
Defence stocks lead FTSE 100, WH Smith shares down 6%
08:27 , Graeme EvansThe FTSE 100 index is up 8.98 points to 8807.89, having risen by 0.7% on Friday..
Defence-focused companies are among the best performing after Babcock International rose 18p to 1155p, Rolls-Royce added 14.2p to 968.4p and BAE Systems put on 16p at 1878p.
On the fallers board, British Gas owner Centrica dipped 3.2p to 160.3p and easyJet lost 2.6p to 529.8p.
WH Smith was under pressure in the FTSE 250 after it announced reduced terms for the sale of the high street business. The stock fell 66p to 1063p, a drop of 6%.
Dealmakers target UK firms, M&A up 3% in H1
08:01 , Graeme EvansThe value of takeover deals involving UK companies as a target for overseas buyers has risen 14% to the highest level in three years.
LSEG Deals Intelligence recorded $59 billion for the first six months of 2025, compared with a decline in domestic activity of 41% to the lowest level since 2020.
Announced M&A with any UK involvement totals $166.6 billion so far during 2025, 3% more than a year ago. That’s despite a 20% decline in the number of deals.
Private equity-backed M&A involving a UK target totals $27.8 billion so far in 2025, 30% more than the value of a year ago and the highest year-to-date in three years.
Examples include Advent’s £3.8 billion takeover offer for Spectris.
UK outbound M&A stands at $23.7 billion so far during 2025, down 39% compared to year ago levels and a six-year low.
Goldman Sachs leads the financial advisor ranking for deals with any UK involvement announced so far during 2025, followed by JP Morgan and Barclays.
The UK is the fourth most active country for M&A globally so far this year, after the United States, China and Japan, with deals involving UK targets accounting for 4.5% of global M&A activity.
WH Smith exits high street, sale terms revised
07:31 , Graeme EvansWH Smith’s sale of its high street business to Modella Capital today completed under reduced terms.
The FTSE 250-listed retailer now expects gross cash proceeds of up to £40 million, which compares with £52 million when the deal was announced in March.
The revision reflects a more cautious outlook for the business under new ownership and a period of softer trading, which has reduced ongoing cash flow.
WH Smith said Modella recently sought amendments to the terms of the deal.
The chain will get £10 million up front, up to £20 million based on the cash flow generation of the business up to August 2026 and up to £10 million based on the realisation of certain tax assets.
The retailer’s sale of the 480 high street stores to the private equity owner of Hobbycraft has left it to focus on its faster growing travel estate.
Nikkei 225 at one-year high, FTSE 100 seen slightly higher
07:10 , Graeme EvansThe Nikkei 225 today continued its strong run, setting a year high after technology stocks benefited from Friday’s robust finish on Wall Street.
The Tokyo-based benchmark improved another 0.8% to stand at 40,481.94, whereas the Hang Seng index slipped 0.3%.
On Friday, Nvidia posted another record as the S&P 500 rose 0.5% to a close at an all-time high of 6173.07 and the Dow Jones Industrial Average added 1%.
The FTSE 100 index rose 0.7% on Friday, with London’s top flight seen 0.1% higher at today’s opening bell.
The pound stands at $1.372 and Brent Crude at $66.87 a barrel.
