The FTSE 100 rose 0.4% to a record high of 10,978.87 points on Thursday morning after Rolls-Royce and BAE Systems both raised their full-year profit forecasts. Futures had pointed to a fall of about 0.6% at the open, following the US Federal Reserve's decision to hold interest rates steady. Indices tracking smaller UK companies dropped.
London's blue-chip index climbed 0.4% on Thursday morning, enough to push it to a record high of 10,978.87 points — slightly up on Wednesday's mark of 10,951. Two profit upgrades from British defence manufacturers, plus an oil price increase that helps the big oil players, appear to have been enough to attract investors to the biggest British companies.
The move ran against the pre-market signal. Futures prices had suggested the FTSE 100 would drop by about 0.6% when it opened, after the Federal Reserve held rates steady despite increasing expectations of inflation.
Rolls-Royce and BAE Systems upgrade full-year guidance
Rolls-Royce reported underlying profit before tax of £2.5bn for the first half of 2026, up 48% from the same period a year earlier. The jet engine maker now expects £4.7bn to £4.9bn in underlying operating profit for the full year, up from previous guidance of £4.0bn to £4.2bn.
BAE Systems followed with its own upgrade, lifting its full-year profit outlook to an increase in the range of 10% to 12%, slightly higher than the 9% to 11% range it had previously given. Its first-half sales rose 9% year-on-year to £15.8bn, with orders worth £16.4bn, up £3.2bn from the same period last year.
BAE tied its upgrade to defence budgets. According to BAE chief executive Charles Woodburn: "The global threat picture remains highly volatile", and governments are responding with sustained increases in their defence budgets. Rolls-Royce shares gained 3.7%, while BAE Systems was up 1.1%.
Shell doubles quarterly profit on the oil price jump
Shell more than doubled its second-quarter profit, with net profit of $9.84bn (£7.4bn) in the three months ended in June. Wholesale energy prices have soared because of the conflict in the Middle East, boosting profit margins and activity on the company's trading desks.
The global oil price has climbed from about $61 a barrel in January to highs of $126 at the end of April. Brent crude, the international benchmark, traded at $93.18 a barrel on Thursday.
Smaller companies fall after the Fed holds
The FTSE 100 gains did not reach the rest of the market. Indices tracking smaller companies fell in early trading, amid global worries that the Federal Reserve may not move fast enough to counter inflation.
Analysts at Panmure Liberum said UK large- and mid-caps were rising while small-cap and Aim stocks declined, following the Fed's decision to leave rates unchanged with three hawkish dissents. Nor did every large London stock join the rise: Rentokil Initial fell 18% after abandoning a plan to increase profit margins in North America to 20%.
Source: The Guardian
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