UK markets hit record highs as global rally continues

FTSE 100 pushes towards closing record

The FTSE 100 rose 0.3% at the open and remained in positive territory throughout the session. The index is on track for a closing record, marking a significant milestone for United Kingdom (UK) equities after months of consolidation.

Cyclical stocks provided the main thrust for the advance. Banks benefited from renewed optimism about the economic outlook, while Shell's gains reflected steadier energy prices. Miners also contributed strongly to the rally as commodity prices held firm.

The breadth of the advance suggests this is more than just a narrow rally. When banks, energy, and materials all participate, it typically signals genuine optimism about economic growth rather than defensive positioning.

This move comes despite ongoing political uncertainty and concerns about the government's fiscal position. Markets are choosing to focus on corporate fundamentals rather than Westminster headlines, a positive sign for sustained momentum.

European markets test record territory

The STOXX 600 continued to probe record highs, supported by the same positive sentiment driving UK equities. Strong global risk appetite has helped offset concerns about sluggish growth in key economies like Germany and France.

Investors appear willing to look past near-term headwinds. Manufacturing data remains weak across much of the continent, yet equity markets are pricing in an eventual recovery. This forward-looking approach has been rewarded in recent months.

The resilience of European equities in the face of political gridlock in the United States (US) is noteworthy. Markets had feared that a divided Congress would derail pro-growth policies, yet indices have shrugged off these concerns.

Sector rotation has been gradual rather than dramatic. Rather than wild swings between growth and value, we're seeing measured participation across the board. This measured approach suggests investors remain cautious about overcommitting to any single theme.

Mixed results for UK corporates

Wetherspoon shares fell over 6% despite reporting revenue and profit growth that beat expectations. The decline highlights how markets are increasingly focused on forward-looking indicators rather than backward-looking results.

Analysts flagged slower recent sales momentum and looming cost pressures as reasons for concern. The pub chain faces rising wage bills and energy costs, squeezing margins even as customer numbers hold up. This pattern is becoming familiar across the hospitality sector.

The negative reaction demonstrates that simply beating estimates is no longer enough. Companies need to show sustained momentum and a clear path to managing cost inflation. Those that can't articulate this strategy are being punished by investors.

On a more positive note, Diploma gained 3% after an RBC upgrade, while Schroders rose nearly 3% following a Citi rating improvement. These moves show that analyst endorsements still carry weight when backed by solid fundamental analysis.

London listings pipeline builds momentum

Beauty Tech made an encouraging debut, rising 4% above its initial public offering (IPO) price in early trading. The successful float adds to growing evidence that London's capital markets are regaining their appeal after a difficult period.

Princes Group's confirmation of flotation plans provides further momentum. The food manufacturer's decision to list in London rather than pursuing overseas options sends a positive signal about the attractiveness of the UK market.

These developments come after years of declining IPO activity in London. Major companies had been choosing New York or Amsterdam over the UK, raising questions about the long-term competitiveness of British capital markets.

The revival appears linked to improved sentiment about UK assets generally. Overseas investors are taking a fresh look at London-listed companies, while domestic pension funds are under pressure to increase UK allocations. Both trends should support further listings activity.

Wall Street extends record run

The Dow Jones, S&P 500 and Nasdaq 100 all ended at fresh highs, with modest gains led by technology stocks. The advance was broad-based despite some notable laggards, suggesting the rally has room to run.

Semiconductor names drove sector gains, with the SOX index up 1.9% to a record close. Apple, Nvidia, and Broadcom provided support to the Nasdaq, reflecting continued optimism about artificial intelligence (AI) applications and chip demand.

The materials sector rose 1% as the top-gaining sector, while the energy sector fell 1% as the biggest loser. Consumer discretionary faced pressure after Tesla dropped 5%, highlighting how individual mega-cap moves can significantly impact sector performance.

The mixed sector performance is actually a healthy sign. Rather than everything moving in lockstep, we're seeing genuine price discovery as investors weigh different opportunities. This selectivity tends to produce more sustainable rallies than indiscriminate buying.

Commodities and credit bureaus in focus

Gold miners outperformed as the metal's rally continued, with bullion pushing towards $2900 per ounce. The advance reflects ongoing concerns about inflation and currency debasement, despite official data showing price pressures moderating.

The commodity strength extends beyond precious metals. Industrial metals have also gained ground on hopes that Chinese stimulus measures will boost demand, while agricultural commodities remain well-supported by tight supply conditions.

Credit bureaus Equifax and TransUnion  tumbled over 8% after FICO launched a new licensing model that threatens their business models. FICO  itself surged 18%, highlighting how disruption creates both winners and losers even within narrow industry groups.

Occidental Petroleum fell 7% after selling a unit to Berkshire Hathaway. The transaction removes a key asset from Occidental's portfolio, though the cash proceeds will strengthen the balance sheet. Markets appear unconvinced about management's ability to redeploy the capital effectively.