UK Stocks Inch Up as Defence and Mining Sectors Drive Market Gains

UK stocks inch up modestly at the start of the month, lifted by robust performance in defence and precious metals mining. The FTSE 100 gained 0.2%, while the FTSE 250 rose 0.1%, reversing some of last week’s losses.

The rally in defence shares followed Norway’s announcement of a £10 billion frigate deal, which buoyed key contractors. BAE Systems rose 1.9%, Babcock added 3.2%, and Rolls-Royce advanced 1.9%, all benefiting from renewed optimism in European defence spending.

In the mining sector, precious metal stocks led the charge as gold prices climbed. Hochschild Mining surged 5.9%, Fresnillo gained 2%, and Endeavour Mining rose 3.1%, responding to safe-haven flows and heightened geopolitical tension.

Tech and services also saw momentum. Kainos Group soared nearly 20% after its upbeat trading update, citing strong demand for digital transformation services. Domino’s Pizza rose 7.5% on reaffirmed earnings guidance and a newly announced share buyback program.

On the downside, luxury retailer Burberry dipped 1.2%, tracking broader weakness in personal goods stocks amid concerns over slowing global discretionary spending. Meanwhile, manufacturing data remained tepid, casting doubt over the sector’s contribution to broader economic recovery.

Overall, the day’s gains were driven by clear sector themes: geopolitical defence spending, commodity price tailwinds, and strong company-specific catalysts. However, underlying macroeconomic signals, particularly in trade and manufacturing, remain mixed, suggesting investors may need to stay selective.