London close: FTSE hits record high as miners, defence firms gain

(Sharecast News) - London stocks rose to a record high on Wednesday, with miners and defence firms on the front foot, as the latest UK inflation reading increased the likelihood of a March rate cut. The FTSE 100 closed up 1.2% at 10,686.18.

Figures released earlier by the Office for National Statistics showed that inflation fell to its lowest level in nearly a year in January.

The consumer price index declined to 3% from 3.4% in December, coming in as expected and marking the lowest rate of annual inflation since March 2025.

Food and non-alcoholic beverages prices rose 3.6% in January, down from 4.5% in the 12 months to December 2025, while services inflation fell to 4.4% from 4.5%.

Core inflation - which excludes energy food, alcohol and tobacco - rose 3.1% in the 12 months to January, down from 3.2% in December and the lowest rate since September 2021, when it was 2.9%.

ONS chief economist Grant Fitzner said: "The cost of raw materials for businesses fell over the past year, driven by lower crude oil prices, while the increase in the cost of goods leaving factories slowed."

Fitzner added: "Airfares were another downward driver this month with prices dropping back following the increase in December. Lower food prices also helped push the rate down, particularly for bread and cereals and meat. These were partially offset by the cost of hotel stays and takeaways."

Dan Coatsworth, head of markets at AJ Bell, said: "It was a red-letter day for the FTSE 100 as it broke 10,700 for the first time and enjoyed its biggest daily gain since early January, topping it all off with another record close.

"Miners did a lot of the heavy lifting thanks to a combination of M&A speculation, positive corporate results and bullish analyst comments, while energy and defence stocks were also in demand.

"The latest results from BAE Systems revealed how the ramp up in military spending is translating into increased revenue and profit for the sector. Heightened tensions between the US and Iran and stalled talks between Russia and Ukraine boosted oil prices and highlighted the ongoing geopolitical concerns which are necessitating increased outlays on defence.

"Falling UK inflation has made a March rate cut from the Bank of England more likely than not, with the market pricing in a 78% chance of a cut when its policymakers next meet. Interestingly there is a 70% chance that's followed up with another cut in April.

"Housebuilders in particular will be hoping these moves, if they transpire, help to revive the property market and give them a boost. A string of downbeat updates from the sector and softening house prices have injected dry rot into their share prices in 2026."

In equity markets, weapons maker BAE Systems rallied after it reported a better-than-expected rise in annual profits as it cashed in on higher government defence spending amid rising geopolitical tensions. The company said full-year underlying operating profit jumped 12% to £3.32bn, beating expectations of a 9% to 11% increase, with its order backlog hitting a record £83.6bn.

Peers gained, with Babcock and Qinetiq also higher.

Mining giant Glencore advanced as its full-year earnings declined less than expected. Miners more generally enjoyed solid gains amid higher copper prices, with Antofagasta, Anglo American and Rio Tinto all higher.

On the FTSE 250, Pan African Resources surged as it said first-half profits more than trebled to a record high as both production volumes and the gold price jumped more than 50% year on year.

Car dealership Inchcape got a boost after JPMorgan placed the shares on 'positive catalyst watch' ahead of its full-year results and hiked the price target on the neutral-rated stock to 880p from 800p.

Market Movers

FTSE 100 (UKX) 10,686.18 1.23% FTSE 250 (MCX) 23,555.82 0.00% techMARK (TASX) 6,173.41 1.15%

FTSE 100 - Risers

Antofagasta (ANTO) 4,000.00p 10.59% Fresnillo (FRES) 3,912.00p 4.77% Anglo American (AAL) 3,661.00p 4.63% Glencore (GLEN) 507.70p 4.47% St James's Place (STJ) 1,270.50p 4.22% BAE Systems (BA.) 2,110.00p 3.99% Rio Tinto (RIO) 7,389.00p 3.84% Compass Group (CPG) 2,180.00p 3.27% Airtel Africa (AAF) 357.60p 3.17% Metlen Energy & Metals (MTLN) 37.15p 3.05%

FTSE 100 - Fallers

BT Group (BT.A) 203.30p -2.45% National Grid (NG.) 1,348.50p -2.03% Diageo (DGE) 1,761.00p -1.95% Severn Trent (SVT) 3,158.00p -1.93% SSE (SSE) 2,604.00p -1.74% Unilever (ULVR) 5,328.00p -1.57% Legal & General Group (LGEN) 271.70p -1.31% Rightmove (RMV) 430.30p -1.26% Land Securities Group (LAND) 658.00p -1.20% United Utilities Group (UU.) 1,350.00p -1.14%

FTSE 250 - Risers

Pan African Resources (PAF) 160.20p 9.88% Inchcape (INCH) 879.00p 5.02% Hochschild Mining (HOC) 715.50p 4.76% Endeavour Mining (EDV) 4,702.00p 4.26% QinetiQ Group (QQ.) 517.00p 3.69% BlackRock World Mining Trust (BRWM) 980.00p 3.16% Rank Group (RNK) 92.80p 3.11% B&M European Value Retail S.A. (DI) (BME) 186.85p 3.09% RHI Magnesita N.V. (DI) (RHIM) 3,215.00p 3.04% WPP (WPP) 271.20p 3.00%

FTSE 250 - Fallers

HGCapital Trust (HGT) 453.50p -3.92% GB Group (GBG) 195.60p -2.93% Wizz Air Holdings (WIZZ) 1,388.00p -2.87% Unite Group (UTG) 578.00p -2.86% The Renewables Infrastructure Group Limited (TRIG) 65.60p -2.81% PPHE Hotel Group Ltd (PPH) 2,005.00p -2.67% WH Smith (SMWH) 677.50p -2.31% C&C Group (CDI) (CCR) 113.80p -2.07% IntegraFin Holding (IHP) 322.50p -1.98% Greencoat UK Wind (UKW) 93.40p -1.84%