London close: FTSE dips after hitting fresh high; hawkish BoE hold in focus

(Sharecast News) - London stocks ended a smidgen lower on Thursday after hitting a fresh intraday high, as investors digested a hawkish hold from the Bank of England amid a solid performance from miners and guidance upgrades from Rolls-Royce and BAE Systems.

The FTSE 100 closed down 0.1% at 10,897.27, having hit a fresh intraday high of 10,979.60.

The BoE kept interest rates unchanged as widely expected, although three policymakers voted for tighter monetary policy amid concerns over energy prices and persistent inflationary pressures. The nine-person Monetary Policy Committee voted six to three to maintain Bank Rate at 3.75%, with Megan Greene, Catherine Mann and Huw Pill preferring a 25-basis-point rise to 4%.

The Bank highlighted that crude and refined energy prices had remained volatile and above levels seen before the conflict in the Middle East, leaving the impact of the energy shock on the UK economy uncertain.

Patrick Munnelly at Tickmill Group said: "London climbed to another record high on Thursday, with the FTSE 100 extending its July advance as investors digested a widely expected Bank of England hold, a hawkish shift inside the MPC and another heavy round of corporate earnings. The index moved to a fresh peak in the morning and hovered just below that level in early afternoon trade, supported by miners, banks, Rolls-Royce and selected energy and defence names."

Munnelly said that while the BoE decision was no surprise, the vote split mattered.

"Support for tighter policy has now risen steadily from one member in April, to two in June, and three in July," he noted. "That shift gave the meeting a more hawkish edge than the unchanged rate alone would suggest. The dissenters are increasingly concerned that the inflationary consequences of the Middle East conflict and the associated rise in energy prices could prove more persistent than initially expected. Their worry is not just that headline inflation rises temporarily, but that higher energy prices feed into inflation expectations, company pricing behaviour and future wage settlements.

"For the majority, however, the case for holding remained compelling. Most policymakers pointed to clear signs that domestic inflationary pressures are easing and little evidence so far that the latest energy shock has generated material second-round effects. The updated Monetary Policy Report broadly reinforced that view, allowing the MPC majority to maintain an already restrictive policy stance while waiting for clearer evidence on whether inflation persistence is re-emerging."

In commodities, oil eased back again, having risen after the US carried out strikes on Iran and Trump warned it would be hit "hard" following a "surprise attack" on American bases in the Middle East. Brent crude was down 1.2% at $89.65 a barrel and West Texas Intermediate was 0.5% lower at $84.04.

In equity markets, mining stocks were among the top performers as copper prices rose.

Rolls-Royce surged as it lifted its full-year profit guidance following a strong first half. It now expects �4.7bn to �4.9bn in underlying operating profits and �3.8bn to �4bn of free cash flow, up from previous ranges of �4.0bn to �4.2bn and �3.6bn to �3.8bn, respectively.

Lloyds Banking Group gained as it held annual guidance after a 23% jump in half-year profits driven by higher net interest income and announced a �1bn share buyback, while Mondi advanced after better-than-expected first-half results.

BAE Systems was also higher as it upgraded full-year guidance and reported a jump in first-half profit as governments ramped up defence investments.

On the downside, Rentokil Initial tumbled after the pest control firm ditched its margin target for North America and said it had seen some weakness in residential lead flow in the region towards the end of the second quarter and into July.

The company said it was "retiring" its NA margin target of 20% in 2027 as it focuses on "driving volume growth over short-term margin expansion".

LSEG was in the red despite lifting its full-year guidance as it hailed a record first-half performance and an "exceptional" performance from the markets businesses.

Market Movers

FTSE 100 (UKX) 10,897.27 -0.10%

FTSE 250 (MCX) 24,079.14 0.34%

techMARK (TASX) 6,057.80 -1.32%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 1,463.00p 6.01%

Halma (HLMA) 3,574.00p 4.81%

Antofagasta (ANTO) 3,704.00p 4.66%

Lion Finance Group (BGEO) 11,590.00p 4.04%

Lloyds Banking Group (LLOY) 115.65p 3.86%

Barclays (BARC) 510.90p 3.74%

Glencore (GLEN) 539.00p 3.51%

Prudential (PRU) 1,135.00p 3.51%

Anglo American (AAL) 3,726.00p 3.44%

Diploma (DPLM) 7,330.00p 3.09%

FTSE 100 - Fallers

Rentokil Initial (RTO) 352.00p -20.60%

Flutter Entertainment (DI) (FLTR) 7,588.00p -7.60%

Relx plc (REL) 2,675.00p -6.92%

London Stock Exchange Group (LSEG) 8,606.00p -6.44%

The Sage Group (SGE) 967.40p -5.34%

Experian (EXPN) 2,898.00p -4.92%

British American Tobacco (BATS) 4,566.00p -3.67%

GSK (GSK) 1,940.00p -3.34%

AstraZeneca (AZN) 12,720.00p -3.15%

Compass Group 11 (CPG) 31.94p -3.07%

FTSE 250 - Risers

Ceres Power Holdings (CWR) 347.20p 13.24%

Mondi (MNDI) 875.60p 10.92%

Ocado Group (OCDO) 211.60p 8.51%

Raspberry PI Holdings (RPI) 665.50p 7.25%

Rosebank Industries NPV (ROSE) 339.00p 4.31%

Watches of Switzerland Group (WOSG) 744.00p 4.13%

Morgan Advanced Materials (MGAM) 226.00p 3.91%

Breedon Group (BREE) 327.40p 3.80%

RHI Magnesita N.V. (DI) (RHIM) 2,885.00p 3.78%

TBC Bank Group (TBCG) 4,800.00p 3.72%

FTSE 250 - Fallers

WPP (WPP) 299.70p -6.93%

Hays (HAS) 60.30p -6.73%

Rightmove (RMV) 456.80p -5.62%

Mony Group (MONY) 201.80p -5.26%

Globaldata (DATA) 79.70p -5.12%

Michael Page (PAGE) 187.80p -4.52%

Worldwide Healthcare Trust (WWH) 377.00p -3.70%

Kainos Group (KNOS) 898.50p -3.34%

Baltic Classifieds Group (BCG) 203.40p -2.96%

Trustpilot Group (TRST) 270.00p -2.88%