FTSE 100 Hits New High Amid Cooling Inflation and Robust Defence Stocks

The FTSE 100, the UK's premier stock market index, reached an unprecedented peak on Wednesday following the announcement of cooled domestic inflation figures for the previous month. This development has enhanced the likelihood of an interest rate cut by March. Defence stocks saw a significant boost, led by BAE Systems' strong financial reports.

The FTSE 100 marked an intraday record, climbing by 1% to 10,666.68 points. Concurrently, the FTSE 250 midcap index saw a slight increase of 0.2%, achieving a four-year high. January's inflation rate dropped to 3.0%, the lowest in nearly a year, attributed to softer increases in transport, food, and non-alcoholic drink prices, according to the Office for National Statistics.

Meanwhile, Sterling showed stability against the dollar. Defence stocks rose by 2.5%, with BAE Systems experiencing a 3.4% surge following its unexpectedly high full-year operating profit, driven by global demand that pushed its order backlog to a record 83.6 billion pounds. In the mining sector, Glencore shares rose 2.7% post a declined takeover attempt by Rio Tinto, coupled with a $2 billion payout announcement. Energy stocks gained 1.3% as oil prices rebounded amidst cautious optimism regarding U.S.-Iran negotiations. Raspberry Pi shares surged for a second day, boosted by speculation regarding their potential in low-cost AI projects.