Record high for FTSE as investors spurn tech

The FTSE 100 reached a series of record highs this week, supported by a combination of strong corporate earnings, rising commodity prices and a global rotation away from richly valued technology stocks into more defensive sectors. 

London's blue-chip index benefited from its heavy exposure to energy, mining, banking and industrial companies, with gains from Shell, Rio Tinto, Glencore, Standard Chartered and Rolls-Royce helping to drive the rally. Higher oil prices, sparked by renewed tensions in the Middle East, boosted energy shares, while robust results and improved shareholder returns from several FTSE-listed companies reinforced investor confidence. 

At the same time, a sell-off in AI-related and semiconductor stocks elsewhere encouraged investors to favour the FTSE 100's more traditional sector mix, which has proved relatively insulated from concerns over technology valuations and AI spending. Microsoft, Meta, Amazon and Apple all reported results that highlighted strong demand for AI-related products and infrastructure, although concerns remain about the enormous capital spending required to support future growth. 

The FTSE 100 was up 2.3% over the week by mid‑session on Friday, with the more UK‑focused FTSE 250 trading 1.7% ahead. Here are the latest articles this week:

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Growth, geopolitics, and market resilience

In the July edition of Market Moves, Chief Investment Officer, Patrick Farrell, unpacks the stories shaping global markets and what they could mean for investors. Patrick reflects on the conflict in Iran, company earnings and the outlook for the UK economy. 

Middle East

Tensions between the US and Iran escalated sharply as renewed military action in the Middle East raised fears of a broader regional conflict and disruption to energy supplies. The deterioration in the security situation pushed oil prices sharply higher, with Brent crude briefly rising towards $91 a barrel, prompting investors to seek refuge in energy producers and other defensive assets. As a result, oil majors such as Shell and BP helped lift the FTSE 100 to record highs, while energy stocks were among the strongest performers globally. The geopolitical uncertainty also reinforced demand for traditional safe-haven assets and added to concerns about inflation, as higher energy prices could complicate the outlook for interest rates and global economic growth.

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Economics

The focus this week was central banks. The US Federal Reserve, the Bank of England and the Bank of Japan all left interest rates unchanged, but the messaging from policymakers was far more important than the decisions themselves. In the US, the Federal Reserve held rates at 3.5%-3.75%, with three policymakers dissenting in favour of a quarter-point increase. More significantly, new Fed chair Kevin Warsh continued his push away from forward guidance, urging markets to focus on economic data rather than central bank signals while stressing that the Fed would not hesitate to act to restore price stability. That was interpreted as a notably hawkish stance given inflation remains above target and the economy has shown impressive resilience. 

The Bank of England also kept its Bank Rate unchanged at 3.75% in a 6-3 vote. Three members favoured a rate rise as policymakers weighed the inflationary impact of higher energy prices linked to the Middle East conflict. While the Bank acknowledged that underlying inflation pressures are easing, it emphasised that risks remain tilted to the upside. 

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Meanwhile, the Bank of Japan maintained its ultra-cautious approach, reflecting the different challenges facing the Japanese economy. Taken together, the message from the world's major central banks was clear: despite signs of disinflation, policymakers remain focused on inflation risks and are not yet ready to signal a decisive shift towards easier monetary policy. 

Company news

Microsoft delivered another exceptionally strong quarter, underlining the power of its cloud and artificial intelligence businesses. Revenue rose 18% to $90.0bn, operating profit increased 18% to $40.6bn and net income jumped 31% to $35.8bn, helped by continuing demand for Azure cloud services and AI-related products. Azure revenue growth remained robust at more than 40%, while Microsoft revealed that Azure has now surpassed $100bn in annual revenue and that Microsoft 365 Copilot has exceeded 30 million paid seats. Management struck a confident tone on the outlook, arguing that AI is becoming an increasingly important driver of growth across the business, although the results also highlighted the substantial investment being made in data centres and AI infrastructure to support that expansion. 

Amazon delivered an outstanding second quarter, with revenue rising 20% to a record $200.6bn and operating income increasing 43% to $27.5bn, driven by booming demand for cloud computing and artificial intelligence services. AWS was the standout performer, with sales surging 37% to $42.2bn, its fastest growth in 18 quarters, as businesses continued to increase spending on AI infrastructure and cloud services. Chief executive Andy Jassy struck an upbeat tone on future growth, highlighting strong momentum across AWS, advertising and retail operations, while also lifting the group's capital expenditure forecast to $220bn for the year as Amazon races to build enough AI capacity to meet surging demand. 

Apple reported its strongest June quarter on record, with revenue rising 16% year-on-year to $109.4bn and diluted earnings per share increasing 29% to $2.02, comfortably beating market expectations. Growth was driven by a 22% jump in iPhone sales and strong performances from the Mac business, while services revenue reached a record $30.7bn despite falling slightly short of analysts' forecasts. However, investors focused on management's cautious outlook, with Apple warning of supply constraints linked to shortages in memory and chip capacity, concerns that overshadowed the earnings beat and weighed on the shares after the results. 

Second-quarter revenue rose 28% to $60.8bn at Meta Platforms, as improvements in AI-driven advertising helped increase both ad pricing and engagement across its platforms. However, profits came under pressure, as costs jumped 55%, reflecting heavy investment in AI infrastructure, legal charges and restructuring expenses. Daily users across Meta's family of apps rose 3% to 3.6 billion, while management struck an optimistic tone on the group's long-term prospects. The company is also facing a landmark lawsuit from a group of major publishers and authors who allege that the company used millions of copyrighted books and academic works without permission to train its Llama artificial intelligence models. 

Shell reported very strong second-quarter results despite disruption in global energy markets, supported by higher energy prices, record production in Brazil and record refinery utilisation. The energy major maintained a strong balance sheet, while continuing to reshape its portfolio through asset sales and the planned acquisition of ARC Resources. Management highlighted ongoing cost-cutting progress, with $5.8bn of structural savings achieved since 2022, and announced another $3bn share buyback, marking the 19th consecutive quarter of at least $3bn in repurchases. 

AstraZeneca's interim results were good, driven by strong double-digit growth in its oncology and rare disease businesses. The pharmaceutical group continued to offset headwinds from generic competition and weaker sales in China through the strength of its newer medicines and product pipeline, while also delivering 30 regulatory approvals in major markets since the end of 2025. Management reaffirmed its full-year guidance and reiterated confidence in its ambition to reach $80bn of annual revenue by 2030, underlining the importance of its late-stage drug portfolio despite some recent clinical trial setbacks. 

GSK's second-quarter update highlighted continued momentum in its core business, with sales rising 5% to £8.4bn and core operating profit increasing 7%, driven by strong growth in specialty medicines, vaccines, oncology and HIV treatments. The company also reported a 9% increase in core earnings per share and robust cash generation, reflecting the strength of its higher-growth product portfolio. While reported profit was heavily affected by a £1.3bn impairment linked to the discontinued Camlipixant cough drug programme, investors were encouraged by GSK's accelerating pipeline activity, including plans for more than 20 Phase III trial starts this year and continued investment in research and development. 

IAG, the owner of British Airways, Iberia and Aer Lingus, reported a resilient second quarter and first-half performance despite higher fuel costs, disruption from the Middle East conflict and broader geopolitical uncertainty. Management highlighted continued strong demand for long-haul travel, robust performance from its loyalty business and disciplined cost control. It expressed confidence in achieving its full-year operating margin target of 12%-15% while continuing shareholder returns through dividends and buybacks. 

Tate & Lyle shareholders overwhelmingly backed the company's proposed takeover by US ingredients group Ingredion, marking a major milestone in a deal that will bring an end to the British food ingredients maker's long period as a standalone listed company. More than 98% of votes cast supported the acquisition, under which Ingredion has offered 595p a share in cash, valuing Tate & Lyle's equity at around £2.7bn. 

BAE Systems delivered a strong set of interim results, reflecting robust demand for defence equipment amid rising global military spending. Sales increased 9% to £15.8bn, and order intake remained strong at £16.4bn. The company ended the period with a record order backlog of £84bn, providing significant long-term revenue visibility. Encouraged by the broad-based growth across all divisions, management upgraded its full-year guidance and increased the interim dividend by 11%, highlighting confidence in the outlook as governments continue to boost defence budgets and BAE invests in areas such as autonomous aircraft, munitions production and next-generation combat systems. 

Rolls-Royce delivered a standout set of interim results, with its transformation programme continuing to drive sharp improvements in profitability, cash generation and operational performance across civil aerospace, defence and power systems. Management raised full-year guidance to £4.7bn-£4.9bn of underlying operating profit and £3.8bn-£4.0bn of free cash flow. The group highlighted strong progress in areas including aircraft engine servicing, defence technologies, data centre power systems and Rolls-Royce SMR, while maintaining a net cash position of £2.1bn. 

Barclays delivered a strong second-quarter performance, with income rising 16% year-on-year to £8.3bn and pre-tax profit increasing more than 30% to £3.3bn, supported by robust results across its UK businesses and a particularly strong showing from the investment bank. Reflecting the strength of the first half, management upgraded its 2026 income target to around £31.5bn. Management also announced enhanced shareholder returns through a £1bn share buyback and an £800m interim dividend.

Lloyds Banking Group delivered a strong first-half performance, supported by higher income, disciplined cost control and resilient credit quality. The board increased its interim dividend by 30% to 1.58p a share and announced a further £1bn share buyback. Alongside the results, chief executive Charlie Nunn unveiled the group's new "Accelerate 2030" strategy, which aims to drive further growth through digital technology, AI and expansion in higher-value fee-based businesses.

NatWest delivered a strong set of interim results, underpinned by growth across its retail, wealth and commercial banking businesses, improved efficiency and continued balance sheet expansion. Reflecting confidence in the outlook, NatWest increased its interim dividend to 12.0p a share and said it would consider resuming share buybacks from the 2026 full-year results, six months earlier than previously planned.

Standard Chartered delivered a record first-half performance, with profit before tax rising 9% to $4.8bn and operating income increasing 6% to $11.6bn, driven by particularly strong growth in its Wealth Solutions and Global Banking businesses. The Asia-focused lender achieved a return on tangible equity of 17.6%, while earnings per share rose 17%, reflecting the success of its strategy to increase higher-margin fee income. Management upgraded its full-year income guidance, announced a new $1bn share buyback and raised the interim dividend to 20.4 cents a share, signalling confidence in the outlook. The results also highlighted the resilience of the bank's international network, with strong demand for wealth management, trade finance and cross-border banking services helping to offset a more uncertain geopolitical backdrop. 

London Stock Exchange Group delivered record interim results, with a notable improvement in margins. Strong growth across its data, analytics, risk and markets businesses helped lift adjusted earnings per share by 17%, while profit before tax rose 29% to £1.3bn. Management raised its full-year guidance, pointing to accelerating growth in subscription businesses, strong demand for data and analytics products, and growing opportunities linked to AI, where thousands of customers are already using its AI-powered Workspace tools. 

Unilever's interim results showed a marked acceleration in growth, with underlying sales rising 4.8% in the first half and 5.8% in the second quarter, driven primarily by higher volumes rather than price increases. Management highlighted that the second quarter delivered the company's strongest volume growth in more than a decade, completed its €800m productivity programme ahead of schedule and upgraded its full-year outlook. The update also underlined progress on the planned separation of the Foods business, which will leave Unilever as a more focused household and personal care group. 

Reckitt's second-quarter results also showed a notable acceleration in growth, with like-for-like net revenue rising 4.7% at group level and 4.2% in its core business. All categories and regions improved, helped by product innovation, stronger demand in emerging markets and a return to growth in North America. The maker of Dettol and Nurofen maintained its full-year guidance, signalling confidence that recent operational improvements are gaining traction despite higher input costs and ongoing geopolitical disruption. 

Pearson reported a strong first-half performance and reiterated its full-year guidance, helped by strong growth in its Virtual Learning business and a return to growth in Assessment & Qualifications during the second quarter. The education group increased its interim dividend by 5% and completed a £350m share buyback, while highlighting growing opportunities linked to workforce reskilling and artificial intelligence, including new partnerships with leading technology companies. Management maintained its outlook for mid-single-digit revenue growth and adjusted operating profit of £640m-£685m for 2026, expressing confidence in Pearson's long-term growth prospects. 

ITV reported a solid first-half performance and said it remained on track to meet full-year guidance. ITV Studios' revenue grew 2%, although profit fell because major programme deliveries and high-margin licensing deals are weighted towards the second half of the year, while Media & Entertainment delivered strong growth, helped by double-digit increases in ITVX viewing and digital advertising revenue and a boost from the men's football World Cup. Management highlighted continued momentum in its streaming business and confidence in ITV Studios' outlook, while also announcing a £100m share buyback following the proposed sale of the Media & Entertainment division to Sky, a deal expected to generate around £950m of net cash for shareholders. 

LVMH delivered a stronger-than-expected second quarter as robust demand in the US and improving trends in Asia helped offset disruption caused by the Middle East conflict. Revenue reached €19.5bn in the quarter and €38.6bn in the first half. Growth was driven by strong performances at Tiffany and Bulgari, continued momentum at Sephora and a return to growth in the crucial Fashion & Leather Goods division, supported by renewed interest in Dior under new creative director Jonathan Anderson. Management struck a more confident tone on the outlook, pointing to improving demand trends and expressing renewed confidence in the long-term potential of its brands.

Frasers Group's pursuit of Hugo Boss took a significant step forward after the Sports Direct owner increased its stake in the German fashion house above the 30% threshold that triggers a mandatory takeover offer under German rules. The group subsequently launched a €38-a-share bid, valuing Hugo Boss at roughly €2bn, but the fashion brand's management urged shareholders to reject the offer, arguing that it was "financially inadequate" and failed to reflect the company's long-term prospects. This week, the bid became unconditional after receiving European Commission approval, removing the final regulatory hurdle. However, shareholder support has so far been limited, with only a small proportion of investors tendering their shares during the initial acceptance period, leaving Frasers with a larger stake but still short of outright control. 

Vodafone's first-quarter trading update pointed to a solid start to its new financial year, driven by broad-based growth across its European and African operations. Germany showed continued improvement, the UK delivered growth following the merger with Three, and Africa remained a standout performer with double-digit revenue growth. The group also benefited from cost-cutting initiatives and strong demand for higher-margin digital services, prompting management to express confidence that it can deliver towards the upper end of its updated full-year guidance range. 

Taylor Wimpey reported a resilient first-half performance in a challenging UK housing market, as affordability pressures, build-cost inflation and regulatory costs weighed on profitability. The housebuilder delivered a robust sales rate and made progress in securing planning permissions, but net cash almost halved to £168.6m and management trimmed full-year completion guidance to 10,600-10,800 homes. Reflecting the prolonged housing downturn and weaker cash generation, the group cut its shareholder distribution policy, declared an interim dividend of 1.2p a share and launched a £42m share buyback programme. Despite a cautious near-term outlook, chief executive Jennie Daly said the company remains focused on cost control, maintaining balance-sheet strength and positioning itself for growth when housing market conditions improve.

Aberdeen's interim results showed solid progress in its turnaround efforts. Assets under management and administration rose 4% to £579.4bn, while investment performance improved, with 86% of assets outperforming over three years. The standout performer was interactive investor, which delivered record net inflows of £6.8bn and a sharp increase in profits, helping to offset continued net outflows in the adviser and investments businesses. 

Rio Tinto delivered a strong set of interim results, benefiting from improved operational performance and supportive commodity prices. The strength of cash generation enabled the miner to raise its interim dividend by 43% to $3.4bn, while continuing to invest heavily in major growth projects including Simandou and its lithium portfolio. Management described the results as a "step-change" in performance, supported by ongoing productivity improvements and a robust balance sheet. 

Anglo American's interim results highlighted the benefits of its ongoing transformation into a more focused mining group centred on copper and premium iron ore. The group continued to make progress with its portfolio overhaul, agreeing the sale of its steelmaking coal business for up to $3.9bn, advancing plans to exit De Beers and nickel, and pressing ahead with its proposed merger with Teck. Although Anglo reported a statutory loss due to a writedown linked to the coal disposal, management struck a confident tone, arguing that the reshaped business is becoming a higher-margin, higher-quality mining company with greater exposure to long-term growth commodities.

Glencore's interim production update highlighted a strong operational performance, led by a 15% increase in copper production to 397,000 tonnes as higher mining rates and improved grades across its African operations and the Antamina mine more than offset the closure of Mount Isa. While zinc production fell 21% and cobalt output dropped 46% due to mine depletion, portfolio changes and export restrictions in the Democratic Republic of Congo, management said key assets were performing broadly in line with expectations and maintained full-year guidance for copper, zinc and nickel despite a mixed production picture across commodities. 

Hammerson reported a strong set of interim results, driven by improving performance across its retail destinations and a disciplined expansion strategy. Total net rental income rose 40% and like-for-like net rental income increased 5%. Footfall across its shopping centres increased 3%, tenant sales grew 2% and flagship occupancy reached 96%, its highest first-half level in seven years, reflecting robust demand for prime retail space. The company also strengthened its portfolio through the £218m acquisition of a 50% stake in Manchester Arndale.

British American Tobacco reported an interim performance broadly in line with expectations, supported by strength in the US and rapid growth in its smokeless products business. New Categories revenue climbed 18%, led by a 66% surge in modern oral nicotine products such as Velo, helping smokeless products account for almost a fifth of group revenue. Management reaffirmed its full-year guidance, said the £1.3bn share buyback programme remains on track and highlighted growing momentum in its transition away from traditional cigarettes towards reduced-risk nicotine products. 

Starbucks delivered a strong set of third-quarter results, suggesting that chief executive Brian Niccol's turnaround strategy is gaining traction. The coffee chain reported adjusted earnings of 85 cents a share on revenue of $9.32bn, both ahead of expectations, while global like-for-like sales rose 7.9%, driven by higher customer traffic and spending per visit. Management raised its full-year guidance, citing growing momentum from its "Back to Starbucks" plan, which has focused on improving customer experience, store operations and brand appeal. 

Sika's second-quarter update pointed to improving momentum despite a challenging construction market backdrop, with local-currency sales growth accelerating to 6.8% in the quarter and helping drive first-half revenue growth of 4.0%. The Swiss building chemicals group continued to gain market share through its focus on infrastructure, data centres and innovative construction solutions, while maintaining strong profitability. Encouraged by the stronger trading performance, management upgraded its full-year sales growth guidance to 3%-6% in local currencies from a previous 1%-4% range.

CRH reported a strong second quarter as positive pricing, resilient demand and acquisitions more than offset inflationary pressures. The building materials group also expanded margins and continued its active portfolio strategy, investing $1.4bn in acquisitions during the year to date and agreeing an $8.5bn takeover of Arcosa to strengthen its position in US aggregates and infrastructure. Management said underlying demand remains favourable, supported by infrastructure spending and reindustrialisation trends, and reaffirmed its full-year guidance.