FTSE 100 surges to fresh records as military co-operation and China snapshot lift stocks
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “The Footsie has surged into the green in a spurt of Monday motivation, with the index hitting a fresh record level. 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. 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.
Sentiment has been boosted by better-than-expected data showing China’s manufacturing sector grew by more than expected in February. The Caixin Manufacturing Purchasing Manager’s index, a closely watched private survey, jumped to 50.8 from 50.1 for the month, with anything over 50 indicating expansion. Another official PMI survey also indicated growth. Both new orders and current production are rebounding, adding to hopes that China’s big struggle to kick-start its economy has turned a corner. Although fresh US tariffs are looming, the manufacturing snapshot is indicating that China’s economy is more resilient and may cope better with another level of trade uncertainty.
Brent Crude has recovered ground, trading around $73 a barrel, as traders assess higher demand from China. Concern about the impact of 25% tariffs on Mexico and Canada which are due to come into force tomorrow are still set to keep a lid on prices. The chances that a trade war will escalate are still high, which would weigh on growth prospects and depress demand for energy.
There’s been a sharp recovery in Bitcoin and other digital currencies as Trump gave more details about a strategic reserve fund crypto bulls had been holding out for. Posting on social media, the President pledged that Bitcoin, Ethereum, XRP, Solana and Cardano would be included in this fund. It’s unclear if the US government intends to go on a buying spree in the crypto market, or whether it will simply use the crypto seized from criminals to bulk it out. It’s also not known how the US government intends the fund to be managed. Despite the lack of details, the pledge has reinvigorated the crypto market, with Bitcoin surging back above $94,000 before falling back again. Volatility is set to remain the name of the game until more is known about how the fund will operate, and crypto is also set to stay influenced by the broader investor outlook.
Sentiment on Wall Street improved sharply on Friday and the S&P 500 is set to continue on a more positive path as the first session of the week gets underway. However, concerns about an increasingly sluggish US economy, the impact of tariffs on inflation and falling consumer confidence, may well come back to bite. At the moment there appears hope that there could be another delay to tariffs on US neighbours, but Trump seems determined to punish them for various ‘unfair’ transgressions, so any last-minute reprieve looks likely to be temporary.
Bunzl, the distributor of rafts of essential goods like safety equipment, cups and soap to sectors like healthcare, hospitality, retail and healthcare has released a solid set of results. There’s more light at the end of the tunnel for the company with revenue and underlying operating profit of 976 million meeting expectations. With more here’s my colleague Matt Britzman,
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “Bunzl’s 2024 results show a company shaking off headwinds, with organic growth finally starting to show some positive signs in the second half. It’s been a tough year; prices have been falling in many of Bunzl’s markets after a period of rampant inflation and that’s been bad news for top line growth – but it might finally be at an inflection point. Key markets are showing brighter volume trends, and pricing looks set to flip positive soon, setting the stage for a stronger core business, with own-brand gains and cost efficiencies promising sustainably higher margins despite last year’s cost pressures.
Bunzl’s real firepower lies in its robust balance sheet and cash flow, fuelling a relentless pace of high-margin acquisitions. The pipeline for future deals is a key strength too, backing up the £700 million-a-year acquisition pledge and locking in a 2025 outlook of robust growth and steady margins.