Must read: defence stocks, Glencore and miners, UK inflation
ii’s head of investment rounds up the morning’s big news.
18th February 2026 08:55
by Victoria Scholar from interactive investor
GLOBAL MARKETS
The FTSE 100 has hit a record high this morning, lifted by defence stocks and miners. The index is up 6.6% so far this year.
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BAE Systems (LSE:BA.) is gaining over 5%, at the top of the FTSE 100 leaderboard thanks to better-than-expected earnings, lifting Babcock International Group (LSE:BAB) with it. Glencore (LSE:GLEN) is another top gainer after announcing plans to return $2 billion to shareholders after its takeover approach from Rio Tinto fell through. Its adjusted EBITDA fell by 6% to $13.51 billion but beat forecasts for $13.3 billion.
On the economic front, according to the Financial Times, Christine Lagarde could leave the European Central Bank (ECB) before the end of her eight-year term in November 2027, allowing Emmanuel Macron and Friedrich Merz to pick her successor.
US futures are pointing higher following gains in Asia, with the Nikkei up over 1% overnight. US markets closed modestly higher on Tuesday.
UK INFLATION
UK CPI inflation hit 3% in the year to January, a 10-month low, falling from 3.4% in December. This was driven by downward contributions from education, transport, food and non-alcoholic drinks. Core CPI dropped from 3.2% in December to 3.1% in January, the lowest since 2021. Factory gate price increases also eased from 3.1% in December to 2.5% in the year to January. However, one area of concern was services sector inflation which remains elevated at 4.4%.
After last month’s bump higher, the headline inflation rate fell this month and, despite the sticky services reading, it is expected to move quite rapidly back to the 2% target in Q2 due to base effects. The bigger question is whether inflation can sustainably remain around that 2% level in the subsequent months and will be key in terms of determining the outlook for interest rates.
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Yesterday’s subdued labour market data, particularly in terms of weak wage growth, combined with today’s drop in inflation and recent disappointing GDP figures, paint a picture of a sluggish UK economy. The damp demand outlook and softer wage pressures reinforce the case for a 25 basis point Bank of England rate cut at its next meeting in March, with the potential for further monetary loosening this year.
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