London's blue chip share index has reached new record highs, with the FTSE 100 hitting 10979.24 intraday on Thursday and set to close above the previous closing peak of 10,910.55 seen on February 27, the day before the Middle East conflict began.
Recovery from initial shock
Britain’s top share index was sent sharply lower when the US and Israel began strikes against Iran on February 28, disrupting oil and energy markets. However, the FTSE has gradually recovered, helped by higher oil prices boosting heavyweights BP and Shell, and defence stocks like BAE Systems benefiting from increased global defence spending.
Indices across Europe also gained on Thursday, while Wall Street moved higher in early trading, despite volatility in the technology sector amid fears of an AI bubble burst.
Key drivers of gains
Kathleen Brooks, research director at XTB, said: “In contrast to the turmoil in tech-heavy spaces, the FTSE 100 has surged to a record high, and is higher by 4.5% in the past month. Its mix of energy stocks, defence names and consumer staples are attractive in the current environment.” She added that indicators suggest “further upside for the UK index as investors rotate away from global tech names”.
An earnings upgrade from engine maker Rolls-Royce helped spur the FTSE to its new record on Thursday, with shares up 6%. Defence giant BAE Systems also hiked its full-year outlook, lifting its stock 2%. Shell delivered better-than-forecast second quarter results, though it failed to hold early session gains.
Not all firms fared well: pest control group Rentokil Initial saw its market value plunge more than a fifth after warning of weaker residential demand in North America, its biggest market. Shares fell 21% despite maintaining its annual outlook.
