Market Brief: London Indices Navigate AI Volatility and Defense Pledges The London stock market maintained a cautious stance on Friday, February 13, 2026. Global sentiment remained fragile following a week of disruption concerns linked to rapid advancements in artificial intelligence. The **FTSE 100** edged down **0.2%** to **10,385.73** by midday. Despite the daily dip, the blue-chip index is positioned for a marginal weekly gain after rebounding from a sharper **0.7%** decline in the previous session. The mid-cap **FTSE 250** followed a similar trajectory, sliding **0.1%** to **23,280.53**. Investors are currently balancing domestic earnings success against upcoming United States inflation data, which historically dictates broader market direction. Sector Performance and AI Jitters Concerns over AI-driven disruption to traditional business models have triggered a volatile week for the UK’s technology and financial sectors. Life insurers and banks saw weekly losses exceeding **4%** at various points. However, a selective rebound occurred on Friday. **RELX** led the recovery with a gain of **5.4%**, while credit specialist **Experian** rose **4.3%**. Banking performance was mixed. **NatWest** reported a significant **24%** jump in annual profit and announced a **£750 million** share buyback. Despite these strong figures, its shares fell **3.3%** as the market had largely priced in the optimistic outlook. Defense Sector Gains The aerospace and defense sector emerged as a primary outlier, gaining **2%** on Friday. This upward movement is driven by expectations of deeper European military cooperation. Defense Secretary John Healey confirmed that allies have pledged up to **$35 billion** in new military aid for Ukraine. This announcement, coupled with Prime Minister Keir Starmer’s expected push for a multinational defense initiative at the Munich Security Conference, provided a strong tailwind. Key players saw notable movement: * **Rolls-Royce** climbed **2.0%** * **BAE Systems** rose **1.3%** * **Babcock International** added **0.2%** Economic Indicators and Monetary Outlook The British economy remains in a low-growth phase, with fourth-quarter GDP expanding by just **0.1%**. This matches the pace of the previous quarter and reflects ongoing caution following recent budget adjustments. On the monetary front, the Bank of England recently held the base interest rate at **3.75%** in a narrow **5-4** vote. Chief Economist Huw Pill noted today that underlying inflation is settling at approximately **2.5%**, slightly above the **2.0%** target. Market participants are currently pricing in a **63.4%** probability of a rate cut later this year, though the timing remains sensitive to upcoming services and wage data. Commodity and Currency Pressure The mining sector weighed on the FTSE 100 as copper prices weakened. Major miners **Rio Tinto** and **Antofagasta** both saw declines of over **2%**. In currency markets, the British pound softened to **$1.3606** against the US dollar. While a weaker pound can boost the relative value of international earnings for the FTSE 100, it also signals a cautious outlook on UK growth compared to global peers.