The FTSE 100 advanced on Thursday as investors assessed the Federal Reserve’s latest interest-rate increase, developments in the US-Iran conflict and the forthcoming Bank of England monetary policy decision.
The UK benchmark gained 0.71% as of 07:12 GMT, while Germany’s DAX rose 0.68% and France’s CAC 40 increased 0.58%. Sterling strengthened 0.10% against the US dollar to $1.3398.
The Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday to a range of 3.75% to 4%, marking its first increase in more than three years. The central bank also signalled the possibility of one further increase before an extended period of unchanged rates.
Investors were awaiting the Bank of England’s policy announcement later on Thursday. Analysts broadly expected the central bank to maintain its benchmark rate at 3.75%, with a projected six-to-three vote.
The decision follows an increase in UK inflation to 3.1%, partly driven by higher fuel costs. ING economist James Smith said there was limited evidence that the energy-price shock was spreading into underlying inflation.
UBS noted that Prime Minister Andy Burnham and Chancellor John Healey had reiterated their commitment to fiscal discipline ahead of the October Budget, despite rising gilt yields adding pressure to the government’s fiscal position.
Geopolitical developments also remained in focus after US President Donald Trump indicated that the conflict with Iran could be approaching its conclusion and said he had communicated directly with Tehran.
Shipping activity through the Strait of Hormuz remained substantially below recent levels. Reuters ship-tracking data showed that three commodity vessels passed through the waterway on Wednesday, compared with 12 the previous day and a 10-day average of 17.
Meanwhile, fighting intensified between Saudi-backed Yemeni government forces and the Houthis. The Houthis claimed to have shot down a Saudi F-15 aircraft, while reports indicated that Saudi Arabia had sought air-defence assistance from France, the UK, Pakistan and Egypt.
Oil prices declined following reports that Saudi Arabia had offered additional crude supplies through Oman.
Brent crude fell 2.07% to $103.64 per barrel, while West Texas Intermediate declined 1.68% to $100.72.
Gold futures slipped 0.64% to $4,359.20 per ounce, although spot gold increased 1.32% to $4,318.99.
UK Corporate News
Capricorn Energy (LSE:CNE) agreed to revised terms for a $396 million takeover by Norway’s DNO after rival bidder Genel Energy withdrew from the process.
Under the revised agreement, DNO will pay $5.214 per share entirely in cash, replacing its previous proposal of $4.224 in cash and a $0.99 dividend per share.
Next (LSE:NXT) raised its profit guidance for the 2026/27 financial year by £12 million to £1.255 billion, marking its fourth upgrade this year.
The retailer reported a 10.5% increase in first-half profit, supported by sales during the hot summer weather.
Drax (LSE:DRX) said it expects 2026 adjusted EBITDA to be around the upper end of analyst consensus, following strong operational performance during the summer and the contribution from its recently acquired Bluefield Solar Income Fund.
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