Partial military mobilisation in Russia announcement makes oil, defence stocks surge

Share markets across the world showed movement as Russian President Vladimir Putin announced partial mobilisation in the country. The escalation has raised concerns about energy supplies as well as increased demand for weapons. 

UK's commodity-heavy FTSE 100 reversed early losses on Wednesday, buoyed by oil stocks as crude prices surged 

The benchmark FTSE 100 (.FTSE) rose 0.5%, while the domestically focussed mid-cap index (.FTMC) added 0.3% by 0817 GMT.

Oil majors BP (BP.L) and Shell (SHEL.L) climbed nearly 2.5% each as crude prices jumped on concerns of tighter oil and gas supply. 

In addition to oil companies, shares of defence companies rose too. Shares of BAE Systems, Britain's biggest defence company jumped by 5.3 per cent

"Investors will be looking at defence stocks and thinking about the potential that governments will look to increase their spend on weapons and on military hardware," said Danni Hewson, financial analyst at AJ Bell. Hewson was quoted by Reuters.

UK Prime Minister Liz Truss was another world leader who caused a stir in the markets.

Housing stocks (.FTNMX402020) rose 3.3% after a report said that Truss will announce plans to cut the stamp duty on property tax in the government's mini-budget this week.

Markets are expecting the Bank of England to follow suit on Thursday, pricing in a 77% chance of a 75-basis-point increase in rates to 2.5%, and a 23% chance of a smaller 50-basis-point increase. 

"After what we saw in Sweden yesterday and what we're expecting to see from the Federal Reserve, it does put a great deal of pressure on the Bank of England," said Hewson.

"Markets are not quite sure what to expect from the BoE because you've got the UK Government about to borrow a huge chunk of additional cash, the expectation that the economy is already in recession and a situation where the BoE cannot cut rates in order to stimulate economic growth because that will only lead to further inflationary pressures."