The UK-based IT services provider was the biggest riser in the FTSE 350 this morning, while Britain’s warship deal with Norway boosted defence stocks.
Kainos rose 20.08 per cent to 849p on the FTSE 250 after the group said it expected revenues for the year ending next March to be at the upper end of consensus forecasts, driven by stronger sales in the period.
On the premier index, defence contractor Babcock continued to lead the way, up 3.54 per cent at £10.52 following news that Norway had signed a £10 billion deal for anti-submarine warships to be built by BAE Systems, which was up 2.16 per cent at £17.95.
The FTSE 100 was trading up 13 points, or 0.1 per cent, at 9,200.70, while the FTSE 250 edged up 0.08 per cent to 21,622.37 respectively.
Bond yield spread between UK and G7 widens
The prime minister’s reshuffle, which sees Darren Jones, chief secretary to the Treasury, moved to No 10 to oversee day-to-day delivery of the PM’s priorities, and Minouche Shafik, former deputy governor of the Bank of England, become economic adviser to the prime minister, has not gone down well with the market.
• Labour reshuffle: Keir Starmer resets Downing St team as MPs return
Bond yield spreads between the UK and other G7 countries are heading in the wrong direction, notes Simon French, chief economist and head of research at Panmure Liberum, and Times columnist.
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Manufacturing activity in Germany rose to a 38-month high
CHRISTOPH STEITZ/REUTERS
Eurozone factory activity expanded for the first time since mid-2022 as domestic demand offset the impact of US tariffs, the latest PMI manufacturing survey showed.
The HCOB Eurozone Manufacturing Purchasing Managers’ Index rose to more than a three-year high of 50.7 in August from 49.8 in July. A reading above 50 indicates growth.
Greece and Spain led factory growth, while manufacturing in Germany, the currency bloc’s largest economy, rose to a 38-month high of 49.8. The German reading offers hope for the economy which shrank 0.3 per cent the second quarter on slowing demand from the US.
Cyrus de la Rubia, chief economist at Hamburg Commercial Bank (HCOB), said: “The recovery is real but remains fragile … domestic orders have risen and are offsetting the weakening demand from abroad. In fact, the best remedy against US tariffs may be to strengthen domestic demand.”
Finastra considers sale of key banking unit
London-based financial software company Finastra is considering a sale of its Middle Eastern and Asian core banking unit in a deal that could fetch more than $1 billion.
The company, owned by private equity firm Vista, is working with financial advisers at Arma Partners as it prepares to launch the sale later this year, according to Reuters which said discussions are at an early stage and no deal was guaranteed.
The unit provides software for banks and credit unions to run core processes and is expected to generate $100 million in earnings before tax and other deductions.
Finastra was created in 2017 by Vista which took Canadian payments tech provider D+H Corp private in a $3.5 billion deal before merging it with Misys, the banking and capital markets business it owned.
UK manufacturing sector shrinks for 11th month
Britain’s manufacturing sector continues to struggle
GETTY
UK manufacturing production continued to contract last month as weak market conditions, tariff uncertainties and downbeat client confidence all contributed to a sharp drop in new order intakes.
The S&P Global UK manufacturing purchasing managers’ (PMI) survey showed a reading of 47 in August, slowing from 48 in July as both domestic and overseas demand fell. A reading below 50 indicates that activity is shrinking.
The sector has been in contraction for eleven months in a row.
Matt Swannell, chief economic adviser to the EY Item Club, said: “August’s final S&P Global manufacturing survey provided further signs that the sector appears likely to continue to underwhelm … The weaker outturn reflected another modest decline in production, while new orders deteriorated further as downbeat customer confidence and elevated trade policy uncertainty reportedly weighed on demand both domestically and in key export markets.”
Mortgage approvals hit a six-month high
The figures came as Nationwide reported house prices stalled in August
ALAMY
Banks and building societies approved the most mortgages in July since January, Bank of England data showed on Monday.
They signed off 65,352 mortgages during the month, more than forecasts of 64,400.
Paul Dales, chief UK economist at Capital Economics, said: “The small rise … is encouraging as it appears consistent with house prices rising at an annual rate of around 4 per cent in six months’ time. That compares to the more downbeat 0.1 per cent month-on-month fall in Nationwide house prices in August.”
Nationwide reported an unexpected slowdown in house price growth in August, with some economists saying job losses and stubbornly high mortgage rates are weighing on the housing market more than anticipated.
Starmer appoints Minouche Shafik as adviser
Sir Keir Starmer has appointed Minouche Shafik, a former deputy governor of the Bank of England, as his chief economic adviser.
Shafik served as the deputy governor for markets and banking between August 2014 and February 2017, before leaving midway through her term to become vice chancellor of the London School of Economics.
Minouche Shafik, then president of Columbia University, speaks in the US Congress last year
ALEX WONG/GETTY IMAGES
In 2023, she became president of New York’s Columbia University, but lasted little more than a year before quitting after the university’s handling of months-long students protests over Israel’s war in Gaza drew criticism from both sides.
Norway’s Equinor backs Orsted rights issue
Orsted is the world’s biggest offshore wind farm developer
TOM LITTLE/REUTERS
Norwegian state-owned energy company, Equinor, said it will support Orsted’s $9.4 billion rights issue as the Danish offshore wind developer looks to bolster its balance sheet after setbacks in the US.
Orsted, majority owned by the Danish government, has fallen victim to President Trump’s animosity towards the renewables sector as the White House attempts to dismantle the federal tax breaks for the green industry awarded by the Biden administration.
Trump has told Orsted to halt a near-complete $1.5 billion project off Rhode Island.
Equinor, which holds a ten per cent stake in Orsted, said: “In response to the challenges facing offshore wind, the industry will see consolidation and new business models. Equinor believes that a closer industrial and strategic collaboration between Orsted and Equinor can create value for all shareholders in both companies.”
• Orsted blames Trump administration for $9.4bn rights issue
The Norwegian company plans to subscribe for new shares worth up to $941 million. It expressed confidence in Orsted’s business and the competitiveness of offshore wind energy and plans to nominate a candidate to Orsted’s board.
Tesla sales fall in Denmark and Sweden
Tesla’s new Model Y has failed to halt the decline in European sales
FRANCIS MASCARENHAS/REUTERS
Sales of new Tesla cars have fallen sharply year-on-year in Denmark and Sweden in August.
In Denmark, new car registrations of the US brand fell to 473 vehicles, a 42 per cent fall, data from Mobility Denmark showed. Registrations of new Teslas in Sweden fell 84 per cent to 210 vehicles, data from Mobility Sweden showed.
• Tesla sales almost halve in Europe as Chinese rivals gain ground
It is the latest sign of the pressures facing Tesla’s billionaire chief executive, Elon Musk, as he looks to restore the company’s fortunes. Sales in Europe have been hit by strong competition from Chinese electric car makers and a continuing backlash against Musk’s political views when he was head of President Trump’s Department of Government Efficiency (DOGE).
Last week, figures from the European Automobile Manufacturers’ Association showed Tesla sales collapsed by 40 per cent in July across Europe, including the UK, to 8,800, despite the relaunch of its popular Model Y. For the first seven months of 2025, Tesla sales are now down by a third, with 60,000 fewer vehicles being delivered at 119,000.
Royal Mail makes £12 million profit 
Daniel Kretinsky
DAVID W CERNY/REUTERS
The Czech billionaire who has acquired the Royal Mail said the UK postal business has reported underlying annual profits for the first time in three years despite a “competitive and challenging” backdrop.
In its first set of figures since Daniel Kretinsky’s £3.6 billion takeover of International Distribution Services (IDS), underlying profits, excluding voluntary redundancy costs, for the Royal Mail for the year to March 31 were £12 million.
This compares with a £348 million loss the previous year. With redundancy costs included, Royal Mail remained in the red with underlying operating losses of £8 million.
The wider IDS group, which also owns the GLS parcel business, reported underlying profits of £278 million, up from a £28 million loss in the previous year. Group revenue was £13.1 billion, up 4.8 per cent.
Defence stocks and miners lead FTSE 100 rise
London’s leading share index has risen sharply this morning, buoyed by defence stocks and precious metal miners.
The FTSE 100 was up 27 points, or 0.3 per cent, to 9,214.80 in early trading. The index ended down on Friday, weighed down by a sell-off in the banking sector over fears of a government tax raid, leading to a weekly drop of 1.4 per cent.
BAE Systems was the biggest riser, up 2.93 per cent, after Britain said it had won a contract to supply submarine-hunting frigates to Norway. Defence company Babcock International gained 2.76 per cent.
The rise in precious metal prices lifted gold and silver miner Fresnillo and gold miner Endeavour Mining, up 2.68 per cent and 2.52 per cent respectively.
Mining, technology and financial stocks were lower.
ECB chief says Trump’s Fed attacks ‘a danger’
ECB president Christine Lagarde
HEIKO BECKER/REUTERS
If President Trump removed the Federal Reserve chairman, Jerome Powell, or a governor, Lisa Cook, it would represent a “very serious danger for the US economy and the world economy”, Christine Lagarde, president of the European Central Bank, has warned.
Lagarde told French broadcaster Radio Classique: “If US monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could, as a result of the effects this would have around the world, be very worrying, because it is the largest economy in the world.”
Trump’s attacks on Powell for not cutting interest rates and his threats to fire him, as well as his attempt to fire Cook, has unsettled markets and led to a sell-off of US assets.
Domino’s Pizza launches £20m share buyback
Andrew Rennie of Domino’s Pizza
BETTY LAURA ZAPATA FOR THE TIMES
The FTSE 250 pizza delivery group has announced plans to buy back £20 million of its own shares and reaffirmed its annual profit forecast.
Last month, the company cut its 2025 core profit forecast to £130 million to £140 million, down from £141 million to £150 million, blaming high costs and subdued customer demand.
Domino’s has said it would increase prices to offset the higher wage bills and increased employers’ National Insurance contributions.
The chief executive, Andrew Rennie, said the exact increase was still uncertain, but pricing adjustments were “inevitable” given the economic environment.
CMA investigates Greencore takeover of Bakkavor
Greencore is a major supplier of sandwiches to major retailers
The competition regulator is to investigate the £1.2 billion takeover by Greencore, the convenience food manufacturer, of rival Bakkavor.
The Competition and Markets Authority had said in July that it was considering an investigation into whether the deal could affect competition in the UK or in other markets. Both groups are major suppliers to Tesco, Marks & Spencer and Sainsbury’s, and the deal would create a new force in the UK in food-to-go.
The CMA expects a decision by October 27.
All eyes on BAE Systems shares after Norway deal 
HMS Cardiff, the second Type 26 frigate to be built for the Royal Navy. The deal with Noway is a huge boost to the UK defence industry
ALAMY
BAE Systems’ shares will be in sharp focus after Britain secured the largest warship export deal in the country’s history, a £10 billion contract to supply submarine-hunting frigates to Norway that will work with the Royal Navy on deterring and defeating Russian attacks.
• Defence industry buoyed by £10bn warship export deal with Norway
The warships will be built at BAE Systems’ Govan and Scotstoun shipyards in Glasgow. Deliveries of the frigates are expected from 2030.
The UK was chosen above France, Germany and the United States to supply Norway with five Type 26 frigates, seen by officials as the “best submarine-hunter on the planet”.
House prices dip in August
Annual house price growth softened in August to 2.1 per cent, from 2.4 per cent in July, figures from the mortgage lender Nationwide showed.
Month-on-month’ prices dipped by 0.1 per cent, after taking account of seasonal effects.
Robert Gardner, Nationwide’s chief economist, said: “The relatively subdued pace of house price growth is perhaps understandable, given that affordability remains stretched relative to long-term norms.”
He said house prices are still high compared to household incomes, making raising a deposit challenging for prospective buyers, while mortgage costs are also a barrier.
“However, affordability should continue to improve gradually if income growth continues to outpace house price growth as we expect. Borrowing costs are likely to moderate a little further.”
Gold rises as traders bet Fed will cut rates
Gold has risen this morning on increased bets for a US Federal Reserve interest rate cut this month, while silver rose above $40 per ounce for the first time in more than a decade.
Spot gold rose 0.9 per cent to $3,480.34 an ounce, while spot silver rose 1.6 per cent to $40.31 an ounce, the highest since September 2011.
Comments by San Francisco Fed president, Mary Daly, that policymakers could be ready to lower interest rates soon, helped trading look past a higher core PCE read on Friday.
Traders are currently pricing in an 87 per cent chance the Fed will reduce rates by 25 basis points later this month, according to the CME FedWatch tool, compared with about 80 per cent at the start of August.
The gold price has been buoyed by a weaker dollar, which has been hit by the US appeal court ruling that most of President Trump’s tariffs are illegal. Gold typically performs well in a low interest rate environment.
Alibaba leads Chinese share rise
Asian shares were mostly down on Monday after a tech sell-off hit Wall Street on Friday, with chip shares among the biggest losers, although Chinese stock markets were the outlier.
Japan’s Nikkei fell 1.56 per cent, led by a 9 per cent fall in the chip group Advantest as investors took profits after the shares had risen nearly 50 per cent over the past three months. South Korea’s market slipped 0.7 per cent.
China’s stock markets rose, with Hong Kong’s Hang Seng index up 1.89 per cent as Alibaba Group jumped as much as 19 per cent at one stage on optimism around its cloud business, buoyed by strong AI demand and robust e-commerce performance.
There were also reports that DeepSeek had opted for Huawei chips to train some of its AI models. On the mainland, the SSE Composite was up 0.24 per cent.
US tariff policy remained a concern after a US court ruled many of President Trump’s trade tariffs were illegal, but left them in place until mid-October for an appeal to the Supreme Court. It puts a question mark over trade agreements already reached or being negotiated.