This report is from this week’s CNBC’s UK Exchange newsletter. Like what you see? You can subscribe here.

It was no surprise, when equity markets first reacted to news of the strikes on Iran, that the U.K.’s FTSE 100 fell by less than all of its major continental European peers.

What is often seen as the Footsie’s weakness — its defensive assortment of pharmaceutical, utility, tobacco and consumer goods stocks — comes into its own at times of market volatility.

Additionally, the index contains plenty of constituents likely to benefit from turmoil in the Middle East, such as the defense contractor BAE Systems and suppliers to the industry, like Babcock International, Rolls-Royce and Melrose Industries, as well as oil majors BP and Shell.

This is a pattern well-established during times of strife: during the second Iraq War in 2003 and the Sept. 11 terrorist attacks in the U.S., the Footsie outperformed its European peers and, during the latter, the Dow Jones Industrial Average as well.

Mining stocks, which could benefit from higher commodity prices caused by disruption to shipping routes and supply chains, are also well represented in the FTSE 100. Rio Tinto, Glencore, Anglo American and the Chilean copper miner Antofagasta are among the 20 largest stocks in the index, while the likes of Fresnillo and Endeavour Mining are well-placed to benefit should the uncertainty lead to another leg higher in the price of gold. 

Nor do these defensive qualities apply just to the leading 100 U.K.-listed companies. The FTSE 250, the mid-cap U.K. stock index, is replete with defense industry suppliers, including Qinetiq Group, Avon Technologies, Hunting and Senior, not to mention oil and gas plays such as Ithaca Energy, Harbour Energy and Clarkson, the world’s largest shipbroking and integrated shipping services provider, another likely beneficiary from maritime disruption.

So, for investors seeking to retain exposure to equities during times of conflict in the Middle East, the U.K. stock market is not a bad option.

To that, it can be added that sterling usually suffers when currency investors seek safety plays in the U.S. dollar, the Swiss franc and the yen, as seen on Monday morning, when the pound initially fell to a three-month low against the greenback.

Because FTSE 100 companies make around three-quarters of their revenues in currencies other than the pound — around 45% or so comes in dollars — sterling weakness tends to be good for the Footsie.

This phenomenon has been understood for years by professional investors but hit home with the wider public when, in June 2016, the vote to leave the EU crushed the pound while the FTSE 100, after an initial sell-off, rallied.

Accordingly, when QatarEnergy suspended LNG production at the Ras Laffan and Mesaieed industrial cities on Monday, U.K. natural gas futures rose by more than 40%.

The rate of inflation in the U.K. spiked after the shock in energy prices following Russia’s invasion of Ukraine in 2022 and remained at elevated levels for the next two years.

The response from the government — to subsidize household energy bills — raised public borrowing hugely, the consequences of which are still being felt today, while higher inflation obliged the Bank of England to operate restrictive monetary policy.

Should history repeat itself, that would not be good for gilts or, indeed, U.K. GDP.

UK PM Keir Starmer suffers major blow after his party comes third in key vote. The result in Gorton and Denton, in Greater Manchester, is likely to intensify speculation about Starmer’s position,

Rolls-Royce raises outlook, plans up to $12 billion share buyback as engine demand boosts growth. Rolls-Royce shares have been on a tear over the past few years amid growth in all three of its businesses: civil aerospace, defense, and power systems.

Europe struggles to be heard as the war on Iran escalates. Few European officials were told in advance about the U.S. and Israeli strikes on Iran, a senior lawmaker with the bloc told CNBC.

— Holly Ellyatt