London, January 8, 2026, 11:24 GMT — Regular session
UK shares eased on Thursday after Shell slid on a downbeat trading update, even as defence names ran higher on fresh bets on military spending. The FTSE 100, London’s blue-chip index, was down 0.3% by 10:40 GMT and the mid-cap FTSE 250 fell 0.4%. 1
It matters because the market’s first full week of the year is already splitting into clear winners and losers — energy and UK retail on one side, defence on the other — and investors are using every trading statement as a stress test for margins and demand.
Britain’s housing pulse did not help. Halifax said house prices rose 0.3% from a year earlier in December and fell 0.6% on the month, undershooting forecasts and keeping the spotlight on how far the Bank of England can cut after December’s move to 3.75%. 2
Shell dropped 2.6% after it said its chemicals and products unit was set for a fourth-quarter loss on “significantly lower” trading results, and it narrowed its LNG (liquefied natural gas) liquefaction outlook to 7.5 million to 7.9 million tonnes. RBC analysts said the update refocused attention on whether the board would “hold the line” on a $3.5 billion buyback, or share repurchase. 3
Defence was the counterweight. BAE Systems climbed more than 6% as Trump called for higher U.S. defence spending and floated a $1.5 trillion military budget, while a White House order on dividends and buybacks for U.S. contractors stirred talk of money rotating into UK-listed peers. “Geopolitics is the inescapable story of 2026 thus far,” said Neil Wilson, UK investor strategist at Saxo Bank, while Investec analyst Ben Bourne flagged UK groups with high U.S. exposure as possible beneficiaries. 4
Retail was messy. Associated British Foods fell 11% after the Primark owner warned annual profit would drop; Primark’s like-for-like sales — which strip out new stores — fell 2.7% in the 16 weeks to Jan. 3, and CEO George Weston said: “Sales have weakened and we see no improvement in consumer confidence.” 5
Greggs slid about 8% after the baker said subdued confidence meant it was pencilling in flat profit this year despite a better Christmas quarter. Chief executive Roisin Currie said, “That’s why we’re being cautious about 2026.” 6
Tesco dropped nearly 5% even after it leaned to the upper end of its profit guidance on firmer holiday sales. CEO Ken Murphy said customers “continue to be cautious” and were hunting value as the grocer kept leaning on price-matching and promotions. 7
But the consumer story still carries downside. Even where volumes held up over Christmas, retailers and supermarkets keep talking about shoppers trading down and waiting for deals, a setup that can squeeze margins quickly if costs do not keep easing. Next CEO Simon Wolfson said consumers were likely to remain “careful” with spending. 8
