London open: FTSE gains as defence firms, precious metals miners rally

1st Sep 2025 08:04

(Sharecast News) - London stocks rose in early trade on Monday, with defence firms and precious metals miners pacing the gains.

At 0830 BST, the FTSE 100 was up 0.3% at 9,212.07.

Matt Britzman, senior equity analyst at Hargreaves Lansdown, said traders were weighing "a quiet calendar and thin volumes amid the US Labor Day holiday".

"Energy names are under mild pressure as oil prices extend their slide, while housebuilders could stay in focus after soft Nationwide data hinted at affordability strains. With few domestic catalysts, attention turns to central bank signals later this week to set the tone for the month ahead," he said.

"US markets are closed for Labor Day, but headlines are anything but quiet. A federal appeals court ruled Trump's global tariffs illegal, setting up a Supreme Court showdown before they expire in mid-October - injecting fresh uncertainty into trade policy. That backdrop, coupled with rising bets on a Fed rate cut later this month, has gold glistening near record highs as investors seek safety. All eyes now turn to this week's labour data, which could shape the size of the Fed's next move."

On home shores, the latest survey from Nationwide showed that annual house price growth slowed in August as affordability remained stretched.

House prices grew 2.1% on the year last month, down from 2.4% growth in July.

On the month, prices dipped 0.1% in August following 0.5% growth the month before.

The average price of a home stood at £271,079 last month, down from £272,664 in July.

Nationwide chief economist Robert Gardner said: "The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms. House prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, especially given the intense cost of living pressures in recent years.

"Combined with the fact that mortgage costs are more than three times the levels prevailing in the wake of the pandemic, this means that the cost of servicing a mortgage is also a barrier for many. Indeed, an average earner buying the typical first-time buyer property with a 20% deposit faces a monthly mortgage payment equivalent to around 35% of their take-home pay, well above the long run average of 30%.

"However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further if Bank Rate is lowered again in the coming quarters. This should support buyer demand, especially since household balance sheets are strong and labour market conditions are expected to remain solid."

Elsewhere, a survey from the Confederation of British Industry showed that private sector firms across all major sectors in the UK expect economic activity to weaken in the coming quarter.

In equity markets, defence names Babcock, Rolls-Royce and BAE Systems all gained after the UK secured a £10bn deal to supply Norway with at least five new warships.

The deal supports 2,000 jobs at BAE Systems' shipyards in Glasgow and a further 2,000 roles across the UK maritime supply chain until the late 2030s, the government said.

Precious metals miners Fresnilo, Endeavour and Hochschild shone as silver and gold prices advanced.

Kainos shot higher as it said revenues for the year ending 31 March 2026 were set to be at the upper end of consensus forecasts, driven by stronger sales in the period.

Domino's Pizza rallied after it announced a £20m share buyback as it takes advantage of a big plunge in its share price over recent weeks. It also said that full-year expectations remain unchanged, though net debt is now expected to be higher than previously expected.

Genuit fell after announcing the acquisition of Monodraught - a provider of commercial ventilation solutions in the UK - for £55.6m.