On Thursday, London’s FTSE 100 experienced a slight decline, influenced by a downturn in oil stocks, despite a notable increase in defence shares, which reached a record high amid escalating military budgets and geopolitical tensions. The blue-chip FTSE 100 slipped 0.3% by 1040, while the domestically focused mid-cap index was 0.4% lower.

Shell dropped 2.6% after the oil major narrowed its projected range for fourth-quarter liquefied natural gas production, as it warned of a loss in its chemicals business. Rival BP opens new tab was down 0.6%. Concerns regarding oversupply, coupled with projections of a significant surplus anticipated in early 2026, have raised alarms within the energy sector, despite a modest uptick in oil prices for the day.

Defence stocks rose to a record high, joining a rally in shares of European and U.S. peers, after President Donald Trump called for higher U.S. defence spending. BAE Systems gained 6.1%, while Chemring and Avon Technologies were up about 1% each. U.S. military actions in Venezuela have heightened geopolitical anxieties, resulting in an uptick in defense stocks earlier this week. In the 12 months leading up to December, British house prices experienced a modest increase of 0.3%, falling short of expectations and marking the weakest annual growth since March 2024. This sluggish performance can be attributed to prevailing economic and tax uncertainties that loomed over the market as the year concluded, according to a source.

Among individual stocks, Associated British Foods slumped 11.3% after the Primark owner warned that annual profit would decline following a sharp slowdown at its Primark fashion chain and weaker U.S. demand impacting its food businesses. Greggs opens new tab fell 7.7% after the fast food chain w subdued consumer confidence meant it would likely see flat profit this year, despite a pick-up in sales in the Christmas quarter. Tesco opened a new tab down 4.9% after the food retailer forecasted full-year profit at the upper end of its guidance, reporting a 3.2% rise in underlying UK sales for the key Christmas trading period.