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UK Stocks Dip Amid Retail Woes, Defence Gains
9 Jan
Summary
- FTSE 100 faced headwinds, slipping slightly on Thursday.
- Tesco and Associated British Foods reported disappointing updates.
- Defence stocks rallied strongly following US budget signals.
The FTSE 100 index exhibited a lack of clear direction on Thursday, ending its trading session with a minor decline. Significant drops in retail giants Tesco and Associated British Foods offset positive movements in defence and banking sectors. Tesco's third-quarter sales fell short of expectations, impacting its share price, while Associated British Foods issued a profit warning, leading to a substantial fall.
Conversely, defence stocks surged following a statement from US President Donald Trump indicating a significant increase in the US defense budget for 2027. This news boosted companies like BAE Systems. Banks also performed well, with NatWest, Lloyds Banking Group, and Barclays seeing gains, supported by a stable operating environment.
Despite the overall market's slight retreat, corporate earnings growth expectations remain robust, with forecasts indicating double-digit increases for the current and next year. Investment director Tom Stevenson advised a cautious approach, emphasizing the need for protections despite optimism for future returns.
