The FTSE 100 climbed to a new intraday record on Thursday, rising 0.4% to 10,950.32 by mid-morning, as a rally in commodity stocks and a sharp advance in Rolls-Royce shares outweighed caution ahead of the Bank of England's policy decision. The mid-cap FTSE 250 also added 0.4%, extending London's relative resilience during a volatile week for global equities.
The record high underscores a shift in market leadership. As investors rotate away from richly valued AI stocks, the UK market's heavier weighting in miners, energy companies, and industrial groups has become a short-term advantage. The FTSE 100's advance is built on a combination of commodity exposure, defense demand, and company-specific earnings strength.
Rolls-Royce Provides Earnings Backing for the Record
Rolls-Royce surged 5.6% after lifting its full-year forecasts well above 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, with revenue up 24% to £11.28 billion.
The strong performance was driven by civil aerospace, which benefited from stronger aftermarket activity and improved long-term service contracts, while defense and power systems also delivered higher margins. The FTSE aerospace and defense sector rose 3.6% on the news. This earnings upgrade gives the record high a clearer foundation, rather than relying solely on commodity prices or demand for defensive assets.
Divergence Beneath the Surface: Mondi and Rentokil
The index-level gain concealed a sharp divide. Mondi jumped 15.2%, on track for its biggest one-day advance since 2009, despite first-half underlying EBITDA falling to €379 million from €564 million due to higher input costs and weaker selling prices. Investors focused on improved trading momentum, price increases, and a cut to expected full-year capital expenditure to about €500 million.
In contrast, Rentokil tumbled 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 prioritizes 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.
Commodity Strength and the Bank of England Risk
Mining shares added further support, with precious-metal and industrial-metal groups rising 1.5% and 1.9%. Energy stocks also advanced as Brent crude 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, after UK inflation eased to 2.6% in June. However, markets still expect at least one quarter-point increase by year-end as energy prices threaten 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 favorable mix: commodity exposure, defense demand, and company-specific earnings strength. The next test is whether that combination can withstand a more restrictive message from the Bank of England.
This article is for informational purposes only and does not constitute financial advice.
