FTSE 100 Climbs to a Fresh Record High as Rolls-Royce and BAE Systems Earnings Beats Lift Shares Higher

London's benchmark stock index climbed to another all-time high on Thursday, extending a remarkable rally that has left the FTSE 100 among the world's best-performing major indexes even as chip-heavy markets in the U.S. and Asia continue to churn through volatility tied to artificial intelligence spending concerns.

The FTSE 100 rose 0.44%, adding 48.24 points to trade at 10,956.65 as of early afternoon in London, according to index data. The index touched an intraday high of 10,979.60 during the session, another fresh record, while its low for the day stood at 10,865.37. Thursday's close compares with Wednesday's finish of 10,908.41, itself a record at the time, meaning the index has now set new all-time highs in consecutive trading sessions.

Strong corporate earnings drove much of Thursday's advance, with Rolls-Royce among the standout performers after the aerospace and defense engineering giant lifted its full-year guidance. The company raised its forecast for underlying operating profit to a range of £4.7 billion to £4.9 billion, alongside expected free cash flow of £3.8 billion to £4.0 billion, an upgrade that analysts characterized as reflecting genuine operational improvement rather than simply a broader defensive-sector bounce. The upgrade helped lift the FTSE's aerospace and defense sector by 3.6% during the session.

BAE Systems also contributed significantly to Thursday's gains, raising its own full-year profit guidance after reporting stronger first-half results driven by higher defense spending. The company posted a 9% increase in sales to £15.8 billion for the six months through June, with growth recorded across all of its business divisions. Underlying operating profit rose 11% to £1.7 billion, while underlying earnings per share climbed 13% to 38.9 pence. Order intake for the period increased to £16.4 billion from £13.2 billion a year earlier, leaving BAE Systems with a record order backlog of £84 billion.

Thursday's gains build on a broader rally that has taken hold across the FTSE 100 over the past several trading sessions, driven substantially by strength in the index's heavyweight energy, banking and mining sectors. Wednesday's session saw the index touch what was then an all-time intraday high of 10,951.06 points, propelled by a surge in oil and gas stocks after renewed fighting in the Middle East pushed Brent crude prices up nearly 7% in a single session, settling at $90.74 a barrel. Energy stocks jumped 2.9% during Wednesday's trading as investors weighed the implications of dashed hopes for an imminent resolution to the ongoing conflict between the United States, Israel and Iran.

Analysts have pointed to the FTSE 100's relatively limited direct exposure to major semiconductor manufacturers and megacap technology companies as a key factor insulating the index from the sharp volatility hitting chip-heavy markets elsewhere in the world this week. That contrast has been especially stark against South Korea's KOSPI index, which has fallen roughly 20% over the past five trading sessions amid a punishing selloff in memory chip stocks, and against the Nasdaq Composite in the United States, which has declined roughly 10% over the past month as investors reassess the sustainability of artificial intelligence infrastructure spending. XTB market analyst Kathleen Brooks noted that the backdrop heading into Thursday's session was "one of rising volatility," particularly for technology-heavy indexes in the U.S. and Asia, a dynamic the FTSE 100 has so far largely avoided given its heavier weighting toward energy, banking and mining stocks rather than technology.

Thursday's trading session also coincided with the Bank of England's latest interest rate decision, announced at midday London time. The central bank's Monetary Policy Committee vote showed a degree of internal division, with policymaker Catherine Mann joining a more hawkish faction within the committee. Peel Hunt economist Kallum Pickering said Mann's position likely "only matters at the margin," suggesting it could reflect a more reactive response to recent escalation in the Middle East rather than a fundamental shift in the committee's broader policy stance. Minutes from the meeting noted that while the committee judged "the risks to the inflation outlook are tilted to the upside relative to the central projection," policymakers also stressed there "remains scope for the outlook to change materially as events in the Middle East unfold."

Other notable corporate movers on Thursday included Mondi, the packaging and paper group, which surged on improved trading momentum and lower capital expenditure despite weaker first-half earnings, a pattern some analysts characterized as signaling the company may be emerging from a margin trough. Rentokil Initial moved in the opposite direction, falling after the pest control company reported weakening lead flow in its North American residential business toward the end of the second quarter and withdrew a previously stated 2027 margin target, a move analysts said signaled potential softening in the company's growth trajectory.

Dividend-focused investors have also taken note of the strength across the FTSE 100 this earnings season. Investment platform AJ Bell has forecast total FTSE 100 dividends of £88.8 billion for the year, alongside declared 2026 share buybacks estimated at £36 billion, according to the firm's most recent dividend tracking data. AJ Bell investment director Russ Mould said Wednesday's wave of corporate earnings announcements had helped push the running buyback total toward £40 billion, though both figures remain estimates and running tallies rather than confirmed final outcomes for the year.

With the Bank of England's decision now delivered and corporate earnings season continuing to unfold across London's blue-chip companies, investors are likely to remain focused on whether the FTSE 100's current run of records can be sustained against a backdrop of continued geopolitical uncertainty in the Middle East and ongoing volatility across global technology and semiconductor markets in the sessions ahead.