𝓤𝓷𝓲𝓽𝓮𝓭 𝓝𝓮𝔀𝓼

The FTSE 100 posted a new record high on Thursday, but ended lower as investors weighed a barrage of earnings and interest rate holds on either side of the Atlantic.

The FTSE 100 Index closed down 11.14 points, 0.1%, at 10,897.27.

The blue-chip index had earlier hit a new intra-day high of 10,979.60.

The FTSE 250 ended up 82.33 points, 0.3%, at 24,079.14, while the AIM All-Share closed up 3.05 points, 0.4%, at 764.90.

Investor focus in London was on a slew of earnings, while central bank meetings in the UK and US provided further food for thought.

In London, the Bank of England (BoE) left interest rates unchanged in a split vote as it weighs the impact on inflation from the Middle East crisis.

The BoE’s Monetary Policy Committee voted 6-3 to leave bank rate at 3.75%.

The central bank has maintained rates in each of its five meetings this year, with the last change a quarter point in December.

BoE chief economist Huw Pill and Megan Greene continued to argue for a quarter point rate increase as they did at the June meeting.

In July, they were joined by Catherine Mann.

Despite the vote turning more hawkish, BoE governor Andrew Bailey played down the idea that the central bank is setting up a hike.

“Please do not leave this room thinking that the Bank of England is edging towards a hike,” he told reporters at a press conference.

“We took a decision today to leave bank rate unchanged, and that is the relevant conclusion.”

The reaction in the bond market supported Mr Bailey’s view.

The yield on 10-year gilts softened to 4.99% on Thursday from 5.04% on Wednesday.

Analysts at RBC Capital Markets said while the vote split surprised in a hawkish direction, the meeting minutes read relatively dovish in their discussion of the disinflationary process that was in place prior to the outbreak of the Iran conflict.

Kathleen Brooks, research director at XTB, noted that although there was an increase in the number of members voting for a rate hike this month, financial markets are trimming expectations for a rate hike in September.

There is now a 40% chance of a hike at the BoE’s next meeting, this is down from more than 50% ahead of this meeting.

“Overall, we think that this meeting has solidified the BoE’s ‘active hold’ stance. The Bank has stated that it remains ready to act, if necessary, but we would need to see a sharp deterioration in the inflation outlook for this to happen,” Ms Brooks added.

On currency markets, the pound soared against the dollar but was steady against the euro.

The pound traded at 1.3439 dollars on Thursday afternoon, against 1.3284 dollars at the equities close on Wednesday.

Against the euro, sterling was slightly lower at 1.1671 euros from 1.1673 euros.

In European equities on Thursday, the CAC 40 in Paris closed up 0.9%, while the DAX 40 in Frankfurt ended up 0.6%, despite a 16% fall in sportswear firm Adidas.

Stocks in New York were higher, with mixed fortunes for Facebook owner Meta Platforms, down 8.9%, and software firm Microsoft, up 14%, after earnings.

The Dow Jones Industrial Average was up 0.3%, the S&P 500 index was 0.8% higher, and the Nasdaq Composite advanced 2.0%.

The gains came after Wednesday’s heavy falls, which followed a confused reaction to unchanged interest rates by the US Federal Reserve.

While Federal Reserve chairman Kevin Warsh continued to state his intention to bring inflation down to target, analysts suggested his actions did not back his words.

Analysts at Morgan Stanley said financial markets went into the July FOMC meeting thinking the new Fed chairman might take decisive action on interest rates to establish inflation-fighting bona fides, regardless of favourable incoming data.

“They likely came out of the meeting more confused than they went in,” the broker added.

JPMorgan analyst Michael Feroli said once again Mr Warsh failed to specify how he intended to achieve his stridently asserted inflation resolve.

“He also cast doubt on whether PCE inflation will remain the Fed’s inflation target in the medium run. Both of these points raise questions about the new chair’s credibility in delivering lower inflation,” he said.

The euro stood higher at 1.1516 dollars from 1.1380 dollars. Against the yen, the dollar was lower at 159.44 yen, compared with 163.85 yen.

The dollar was also impacted by data showing US economic growth slowed more than expected in the second quarter of 2026, although economists said the headline figure masked underlying resilience, as business investment, led by artificial intelligence spending, continued to underpin the world’s largest economy.

In addition, figures showed the personal consumption expenditures price index, a closely watched pricing gauge, fell 0.1% in June from May, matching FXStreet-cited market expectations.

Annual PCE inflation slowed to 3.7% from 4.1%.

Core PCE, which strips out food and energy prices, rose just 0.1% on the month, below market expectations for a 0.2% increase.

Annual core inflation eased to 3.3% from 3.4%.

The yield on the US 10-year Treasury stretched to 4.67% on Thursday from 4.64% on Wednesday.

The yield on the US 30-year Treasury widened to 5.21% from 5.12%.

Back in London, Rolls-Royce led the risers, up 6.0%, after the London-based aerospace and defence company raised guidance once more after a strong first half of 2026.

Rolls-Royce said operating profit increased 17% to £2.42 billion in the first half of 2026 from £2.07 billion the year prior.

Underlying operating profit grew 46% to £2.53 billion from £1.73 billion, which RBC Capital Markets said was 38% ahead of £1.84 billion consensus.

Revenue rose 21% to £11.45 billion from £9.49 billion, outstripping £10.17 billion consensus.

RBC Capital Markets analyst Mark Fielding called it “another very strong quarter with blow-out margins across the board”, while Chloe Lemarie at Jefferies was also effusive, calling it a “stellar performance”.

Lloyds Banking Group led a firmer banking sector higher, climbing 3.9%, as it set out financial targets to 2030 and reported better-than-expected results.

Peer NatWest gained 2.8% ahead of its own earnings on Friday.

But investors in Rentokil Initial had a day to forget as shares plummeted 21%.

The pest control specialist said it plans to invest more in its North American business, and as a result “retire” a margin target, as performance in the unit fell short of expectations.

Organic revenue growth in the North America Pest Control Services business slowed to 2.4% in the second quarter from 2.8% in the first three months of 2026, well below the 3.0% mid-point of the 2.6% to 3.4% guidance range.

Brent oil for September delivery traded lower at 89.84 dollars a barrel on Thursday afternoon, from 90.09 dollars late on Wednesday.

Gold was higher at 4,099.23 dollars an ounce on Thursday from 4,011.17 dollars on Wednesday.

The biggest risers on the FTSE 100 were Rolls-Royce, up 83p at 1,463p, Halma, up 164p at 3,574p, Antofagasta, up 155p at 3,704p, Lion Finance, up 450p at 11,590p, and Lloyds Banking Group, up 4.3p at 115.65p.

The biggest fallers on the FTSE 100 were Rentokil Initial, down 91.3p at 352p, Relx, down 199p at 2,675p, London Stock Exchange Group, down 592p at 8,606p, Experian, down 179p at 2,898p and Sage Group, down 54.6p at 967.4p.

Friday’s economic calendar has an interest rate decision in Japan overnight, eurozone inflation data, the Chicago PMI and the Michigan consumer sentiment index.

Friday’s UK corporate calendar sees half-year results from British Airways owner International Consolidated Airlines, bank NatWest and online property portal Rightmove.

Contributed by Alliance News