FTSE 100 drops for the fifth straight session

The blue-chip index closed 0.5% lower as aerospace and defence stocks dropped 2% to their lowest level in more than two months

London’s FTSE 100 slid for the fifth straight session on Wednesday with defence and financial stocks leading the downturn, while inflation data bolstered expectations for a December rate cut.

The blue-chip index closed 0.5% lower as aerospace and defence stocks dropped 2% to their lowest level in more than two months. The sector’s decline followed indications of renewed U.S. efforts to resolve the Russia-Ukraine conflict, which broadly pressured European defence equities.

Defence giant BAE Systems led the decline, dropping 4.5%, while aero engine manufacturer Rolls-Royce and engineering firm Babcock International slid 0.6% and 3.4% respectively.

Despite Wednesday’s pullback, the sector added 70% year-to-date.

On the economic front, inflation in Britain slowed down in October for the first time since May, offering relief to the government before next week’s annual budget and boosting the probability of a rate cut by the Bank of England.

Traders are pricing in around 86% odds of a quarter-point cut in December, according to swap markets data.

MPC officials will, of course, still be glued to the details of next week’s Autumn Budget, but assuming it’s as tax-heavy and unfriendly to growth as we expect, a December rate cut seems to be a fairly safe bet, said Matthew Ryan, head of Market Strategy at global financial services firm Ebury.

Banking stocks declined 0.7%, dropping for a fifth straight session.

On the flip side, precious metal miners added 3% as gold prices gained more than 1%.

The mid-cap FTSE 250 index closed little changed with Workspace Group dropping 5.3% after the office provider reported a 4% decline in property valuations for the first half of 2025.