FTSE 100 edges higher as precious metals shine and banks stabilise

​​​Gold and silver miners surge on record prices

​Precious metals miners delivered the strongest performance across the FTSE 100 as gold reached fresh all-time highs and silver approached $52.00 an ounce. Fresnillo, Endeavour Mining and Hochschild Mining all surged more than 5% as investors piled into defensive assets.

​The rally in precious metals reflected broader market anxiety about trade tensions and economic uncertainty. Gold traditionally serves as a store of value during turbulent periods, with investors viewing it as protection against currency weakness and geopolitical risks.

Silver advance towards $52.00 represented a particularly notable move, as the metal often exhibits greater volatility than gold. The white metal benefits from both its monetary properties and industrial applications, providing exposure to multiple demand drivers simultaneously.

​Mining stocks can offer leveraged exposure to underlying commodity prices, as operational costs remain relatively fixed while revenues rise with metal prices. However, investors should remember that this leverage works in both directions during price declines.

​Lloyds absorbs motor finance hit

​Lloyds Banking Group announced an additional £800 million provision for motor finance compensation, bringing its total charge to £1.95 billion. Despite the substantial hit, shares in the UK's largest domestic bank rose as much of the provision had already been anticipated.

​The motor finance issue relates to historical commission arrangements in car loan sales. UK regulators have been investigating whether customers were treated fairly when dealers received commissions for arranging finance, potentially creating conflicts of interest.

​Lloyds' decision to increase provisions proactively may help draw a line under the matter. The bank's management likely judged that taking a larger one-off hit now would be preferable to ongoing uncertainty about the ultimate cost.

​The market's positive response suggested investors appreciated the clarity, even if the absolute numbers were substantial. Banks often face periodic conduct issues related to past business practices, with producer price index (PPI) mis-selling representing the most prominent recent example.

​AstraZeneca lifts index on tariff breakthrough

​AstraZeneca emerged as one of the FTSE 100's standout performers, gaining 0.9% after securing a favourable arrangement with US authorities. The pharmaceutical giant agreed to reduce drug prices in America in exchange for three years of tariff relief.

​The deal provides welcome certainty for the company's US operations, which already produce most of its American sales domestically. This existing manufacturing footprint meant AstraZeneca was relatively well-positioned compared to peers more exposed to potential trade disruptions.

​Pharmaceutical shares have faced heightened scrutiny amid ongoing debates about drug pricing and international trade policy. The agreement demonstrates how individual companies can negotiate specific arrangements even as broader trade tensions persist.

​The positive reaction in AstraZeneca's share price helped offset weakness elsewhere in the index. Large-cap pharmaceutical stocks often provide defensive characteristics during periods of market uncertainty, making them popular holdings for investors seeking stability.

​Banks and European markets stabilise

​UK financials gained ground alongside their European counterparts as markets steadied following last week's trade-related selloff. The STOXX Europe 600 rose 0.6% while theFrench CAC 40 led continental gains with a 0.9% advance.

​French markets benefited from Prime Minister Bruno Lecornu's reappointment, which helped stabilise political sentiment. Government stability remains important for investor confidence, particularly in larger European economies where political uncertainty can weigh on business investment decisions.

​The broader banking sector's resilience reflected easing concerns about the immediate economic impact of trade tensions. Financial stocks tend to be cyclically sensitive, performing well when economic growth expectations improve and struggling when recession fears mount.

​Shawbrook Group confirmed plans for a London initial public offering (IPO) targeting £50 million in proceeds. The challenger bank's decision to pursue a listing suggests management confidence in both their business model and market conditions for new flotations.

​UK housing sector in focus

​Homebuilders Barratt Redrow and Persimmon launched new 5% deposit schemes to support buyers following the end of the Help to Buy programme. The initiatives aim to make home ownership more accessible as government support winds down.

​The schemes reflect the sector's need to maintain transaction volumes in a challenging market. Higher interest rates and living costs have reduced affordability for many potential buyers, particularly first-time purchasers who often struggle to save large deposits.

​Developer-backed deposit programmes can help bridge this gap by reducing the upfront cash required. However, buyers should carefully consider whether they can afford the mortgage payments over the long term, not just the initial deposit.

​The housing market remains sensitive to interest rates, with recent stability in borrowing costs providing some support. Any future rate cuts could boost affordability and transaction volumes, benefiting housebuilder share prices.

​Currency and broader market moves

​Sterling eased 0.2% to trade above $1.33 against the US dollar,while gilt yields remained broadly unchanged. The British pound's modest decline reflected a slight improvement in risk appetite, which often benefits higher-yielding currencies over traditional safe havens.

​UK government bond markets showed little movement as investors awaited further economic data. The Bank of England's (BoE) monetary policy stance continues to balance inflation concerns against growth risks, with any shifts likely to impact gilt yields significantly.

​Oil prices rose as the broader mood in commodity markets improved. Energy costs play an important role in inflation dynamics, with higher prices potentially complicating central bank decisions about future interest rate moves.

​Wall Street futures gained as markets welcomed signs of a softer tone from Washington regarding US-China trade tensions. American equity markets often set the tone for global risk appetite, with European and UK markets typically following their lead.