MARKET REPORT: Defence stocks fired up after crisis in Red Sea

Defence stocks rose after UK and US military forces launched air strikes against the Yemen rebels responsible for attacks on ships in the Red Sea.

Over the past few weeks Iranian-backed Houthis, who support Hamas, have targeted ships passing through the region in response to Israel’s campaign in Gaza.

The attacks by the rebels have disrupted global trade and led to vessels changing their routes in a bid to avoid passing through the Red Sea.

Last night the UK and US hit back by striking Houthi targets in Yemen.

As tensions escalates, defence stocks rallied with BAE Systems up 2.2 per cent, or 26p, to 1,189.5p, while Rolls-Royce added 2.7 per cent, or 8p, to 305p. Melrose increased 2.1 per cent, or 12.2p, to 584p.

Attacks: Iranian-backed Houthis have targeted ships passing through the region in response to Israel’s campaign in Gaza

Gold miners also made gains as investors flocked to safe-haven assets. Fresnillo climbed 3.1 per cent, or 15.8p, to 533.4p, Centamin gained 2.3 per cent, or 2.2p, to 95.5p and Endeavour Mining increased 3.8 per cent, or 54p, to 1,479p.

And the price of oil rose to its highest level this year following the Western military action.

Brent crude reached $80 a barrel before dipping a touch later.

It sent Tullow Oil up 1.6 per cent, or 0.5p, to 32.7p, while Harbour Energy rose 0.03 per cent, or 0.1p, to 298.5p and Energean gained 0.4 per cent, or 3.5p, to 962.5p.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: ‘Overall, the oil price is looking to end the week little changed, but the risk of volatility has increased significantly.’

But airline stocks endured a turbulent session following the Yemen strikes. Wizz Air dropped 2.8 per cent, or 60p, to 2,071p, Easyjet slid 2.2 per cent, or 11.2p, to 503p and British Airways-owner IAG retreated 2.9 per cent, or 4.3p, to 144.4p.

On the wider market, the FTSE 100 rose 0.6 per cent or 48.3 points, to 7,625 and the FTSE 250 was up 0.5 per cent, or 89.7 points, to 19,197.6.

The UK economy bounced back in November following a slump the month before.

Wood Group was among the top mid-cap risers after the engineer’s revenues and profits rose 9 per cent in 2023 following contract wins such as working on a green hydrogen project in Spain.

Shares gained 2.9 per cent, or 4.4p, to 157p.

Vistry is pinning its hopes on a surge in demand in 2024.

It came as the housebuilder said it is ‘encouraging’ to see how mortgage rates have eased.

The upbeat outlook followed a strong finish to last year, with Vistry expecting its annual profit to be above the £410m it previously forecast. Shares rose 0.5 per cent, or 4.5p to 972p. Trustpilot extended its gains a day after the review website reported a sharp jump in revenues and bookings. Shares, which soared 12 per cent on Thursday, added 2.1 per cent, or 3.5p, to 167p.

Mining firm Yellow Cake traded higher after uranium prices hit a 15-year high following supply constraints. The stock gained 5.8 per cent, or 38p, to 697p.

A small and mid-cap investor in London-listed firms such as THG, TheWorks and Angling Direct wants to raise fresh funds by issuing new shares.

Kelso Group, which was set up in 2022 to ‘unlock value in the UK stock market’, has proposed placing nearly 63m shares at 3p.

But this represents a 10 per cent discount to the previous day’s price. Shares sank 3.6 per cent, or 0.1p, to 3.2p.

Manchester-based tech group Nanoco has signed an agreement with a European electronics customer.

As part of the two-year scheme, it will work with ST to develop a new product. Shares increased 3.1 per cent, or 0.6p, to 19.6p.

This post first appeared on Dailymail.co.uk