FTSE 100: London Benchmark Climbs Near Four-Month High as easyJet Takeover Bid and Defence Stocks Lead Gains

The FTSE 100 gained 0.72% on Thursday, climbing toward four-month highs as a combination of easing commodity pressures and sectoral strength outweighed persistent consumer weakness. The primary driver was a sharp decline in crude oil prices, which fell to $72.49 per barrel—aligning with pre-conflict levels from February 28 before US and Israel strikes on Iran. The gradual increase in crude flows through the Strait of Hormuz eased geopolitical supply concerns. According to Deutsche Bank Research, this oil price recovery has "eased fears about a stagflationary shock and aggressive rate hikes," underpinning broader market sentiment and supporting energy-linked equities.

EasyJet emerged as the session's standout performer, surging approximately 10% after rejecting a takeover offer from Castlelake. The airline's strong performance anchored blue-chip gains alongside notable strength in the defence sector. The Aerospace and Defence index climbed 1.9%, with Rolls-Royce advancing 2.1% amid escalating geopolitical tensions. These sectoral dynamics—combined with gains in financials and retail—pushed the broader index higher, though midcap and smaller indices showed more modest performance.

Economic data presented a mixed picture. UK vehicle manufacturing rose 2.7% year-over-year in May to 51,178 units, ending a four-month decline with car production climbing 3.2% to 49,249 units. The Society of Motor Manufacturers and Traders characterized the rebound as "welcome," though executives urged competitive reforms including reduced industrial costs and sustained free trade with the EU. However, retail sentiment deteriorated sharply. The CBI distributive trade survey reported sales balance fell to -54% in June from -46% in May, significantly missing the consensus estimate of -41%. CBI Lead Economist Martin Sartorius noted retailers reported "a gloomy start to the summer" with sales disappointing to the "greatest extent in over two years amid depressed consumer sentiment and rising cost pressures."

This divergence between equity market strength and weakening consumer conditions reflects the market's focus on commodity relief and geopolitical hedges rather than domestic demand fundamentals. The FTSE's advance was supported by specific catalysts—takeover rejection, defence upside, and oil recovery—rather than broad-based economic improvement, leaving underlying structural consumer weakness unresolved.