FTSE 100 hits record as Rolls-Royce and miners power London stocks

The FTSE 100 rose to a fresh intraday record on Thursday as stronger commodity shares and a surge in Rolls-Royce outweighed caution before the Bank of England’s policy decision.

The blue-chip index gained 0.4% to 10,950.32 by 9:43 am GMT, while the FTSE 250 added 0.4%.

The advance extended London’s relative resilience during a volatile week for global equities.

As investors cut exposure to richly valued AI shares, the UK market’s heavier weighting towards miners, energy companies and industrial groups has become a short-term advantage.

Rolls-Royce gives the record an earnings engine

Rolls-Royce climbed 5.6% after lifting its full-year forecasts well beyond its previous range.

The engine maker now expects underlying operating profit of £4.7 billion to £4.9 billion, up from £4 billion to £4.2 billion, and free cash flow of £3.8 billion to £4 billion.

First-half underlying operating profit rose 46% to £2.53 billion as revenue increased 24% to £11.28 billion.

Civil aerospace benefited from stronger aftermarket activity and improved long-term service contracts, while defence and power systems also delivered higher margins.

That helped lift the FTSE aerospace and defence sector by 3.6%.

The move matters for the wider index because it gives the record high a clearer earnings foundation, rather than leaving it dependent only on commodity prices or demand for defensive assets.

Mondi and Rentokil expose a divided market

The index-level gain concealed a sharp divide beneath the surface. Mondi jumped 15.2%, putting the packaging group on course for its biggest one-day advance since 2009.

Its first-half underlying EBITDA fell to €379 million from €564 million as higher input costs and weaker selling prices squeezed margins.

Investors appeared to focus instead on improved trading momentum, price increases and a cut to expected full-year capital expenditure to about €500 million.

Rentokil moved in the opposite direction, tumbling 17.3%.

The pest-control group reported 3.6% organic revenue growth and a 6.6% increase in adjusted operating profit, but warned that North American residential lead flow weakened late in the second quarter and into July.

It also retired its target for a 20% North American margin in 2027 as it prioritises reinvestment and volume growth.

The contrast shows that the FTSE’s record is not a broad vote of confidence. Investors are rewarding credible upgrades and cash discipline while punishing any sign that growth targets may be slipping.

The Bank of England could challenge the rally

Mining shares added further support, with precious-metal and industrial-metal groups rising 1.5% and 1.9%, respectively.

Energy stocks also advanced as Brent traded above $90 after fresh US strikes in Iran.

That commodity strength is helpful for the FTSE 100, but it complicates the domestic policy outlook.

The Bank of England was widely expected to keep Bank Rate at 3.75% at noon in London after UK inflation eased to 2.6% in June.

Markets nevertheless expected at least one quarter-point increase by year-end as energy prices threatened to revive inflation pressure.

A hawkish vote split or tougher language could push gilt yields and sterling higher, weighing on domestic, rate-sensitive shares in the FTSE 250.

The internationally focused FTSE 100 may prove more resilient, particularly if earnings upgrades continue.

For now, London’s record reflects an unusually favourable mix: commodity exposure, defence demand and company-specific earnings strength.

The next test is whether that combination can withstand a more restrictive message from the Bank of England.