Highlights:

• FTSE 100 edged slightly higher, closing at 9,196 as defense and precious metals stocks led gains.

• Manufacturing sector contraction continued in August, despite solid credit flows and mortgage approvals.

• Corporate updates, including share buybacks and defense contracts, influenced investor sentiment.

London’s FTSE 100 closed marginally higher on Monday at 9,196, paring earlier gains as investors navigated mixed domestic economic signals and awaited key U.S. labor market data. The modest advance reflected the market’s balancing act between robust corporate performance in select sectors and broader macroeconomic headwinds, particularly a continued downturn in UK manufacturing.

Precious Metals and Defense Drive Gains

Precious metals stocks were among the day’s top performers, with Endeavour and Fresnillo benefiting from gold prices approaching record highs and silver hitting a 14-year peak. Investor interest in commodities was further supported by global uncertainties and currency fluctuations, which often drive safe-haven demand.

The defense sector also provided a notable lift. Shares of Babcock, Rolls-Royce, and BAE Systems rose following the UK’s announcement of a £10 billion contract to supply Norway with at least five new warships. This deal represents the largest-ever British warship export by value, underscoring the strategic importance of defense exports in supporting corporate revenues and investor confidence.

Domino’s Pizza contributed positively as well, rallying after unveiling a £20 million share buyback program. Such initiatives signal management confidence in future performance and often attract yield-seeking investors amid volatile broader markets.

Utilities and Manufacturing Struggles

Not all sectors participated in the rally. Utilities companies, including SSE Plc, United Utilities Group, and Severn Trent, saw declines, reflecting investor caution around regulated returns amid rising energy costs. Additionally, 3i Group weighed on the index following weaker performance updates.

On the macro front, the latest UK Purchasing Managers’ Index (PMI) survey indicated that manufacturing continued to contract in August. Although domestic credit flows remained healthy and mortgage approvals climbed, the persistent manufacturing slump highlights structural challenges in production and supply chains, which could temper broader economic growth in the near term.

Broader Market Context and U.S. Data

Investor attention also remained partially fixed on upcoming U.S. labor market releases, which could influence global risk sentiment and cross-border capital flows. The interplay between domestic economic resilience, particularly in credit and housing, and external pressures from slower global manufacturing, sets a nuanced backdrop for equity performance in the UK.

The FTSE 100’s marginal gain of 0.10% on Monday reflected this delicate equilibrium. Over the past month, the index has climbed 0.75% and nearly 10% year-on-year, signaling that long-term momentum persists despite short-term volatility. Analysts note that the index remains just below its all-time high of 9,358.90 reached in August, suggesting that selective corporate strength and global commodity trends continue to support investor sentiment.

Forward-Looking Perspective

Looking ahead, UK equities face a mixed environment. Precious metals and defense contracts could continue to anchor gains, while manufacturing weakness and sector-specific volatility in utilities may cap upside potential. Investors are likely to monitor both domestic credit trends and international macro developments, particularly U.S. labor data, to gauge market direction. As global economic uncertainties and commodity dynamics evolve, market participants will weigh short-term earnings catalysts against broader structural risks to determine the next phase of FTSE 100 performance.