Key facts
- John Healey resigned as defence secretary due to insufficient funding for the armed forces.
- His resignation puts pressure on Sir Keir Starmer's government.
- The FTSE 100 rose 0.8% to 10,335p, supported by defensive stocks and miners.
- US markets rebounded, with the Dow up 0.45%, S&P 500 up 0.2%, and Nasdaq up 0.1%.
- The European Central Bank raised interest rates by 0.25% to combat rising inflation.
- A government source admitted plans to cut spending in other departments to increase defence funding.
John Healey has resigned as defence secretary, citing a lack of funding for the armed forces and putting pressure on Sir Keir Starmer's government. Industry officials expressed regret over the departure, with Kevin Craven, chief executive of defence industry group ADS, calling it a "damning reflection" on the government's approach to defence investment.
In response to Healey's resignation, a government source admitted plans to cut spending in other departments to fund billions more for defence. This comes as the UK's FTSE 100 index climbed 0.8 per cent to 10,335p, buoyed by defensive stocks and miners, defying fresh tensions between Iran and the US. The US carried out a "self-defence" action on Iranian military capabilities following retaliatory strikes.
US markets also rebounded on Thursday, with the Dow Jones Industrial Average gaining 0.45 per cent to 50,144, the S&P 500 rising 0.2 per cent to 7,279, and the Nasdaq Composite adding 0.1 per cent to 25,195. Intel was a notable riser, up more than eight per cent, while Oracle shed 12 per cent.
The European Central Bank hiked interest rates by 0.25 per cent to combat inflation, which has risen to 3.2 per cent in the Eurozone, partly due to the ongoing conflict. Kathleen Brooks, research director at XTB, noted concerns that the rate hike could worsen growth issues, as inflation is driven by an energy supply crunch.
In corporate news, Spire Healthcare shares rose four per cent after its takeover deadline was extended by Toscafund Asset Management. Separately, BT handed its chief executive Allison Kirkby a £5.6m pay packet, nearly double her previous year's earnings, as the company pursues cost-cutting measures.