FTSE 100 gains as miners surge on record metal prices

Miners drive FTSE 100 higher

The FTSE 100 opened 0.2% higher on Tuesday, outperforming its European peers as mining stocks rallied on surging metal prices. Fresnillo and Endeavour Mining led the index once again, while Glencore also contributed strong gains as both precious and base metals climbed.

The composition of the year's best performers looks familiar. Just as in 2025, miners and defence companies are dominating the top spots, reflecting ongoing geopolitical concerns and a flight to tangible assets.

The British pound edged 0.1% higher against the US dollar, trading just above $1.34, while gilts showed little movement at the open. The currency remains relatively stable despite the broader market volatility affecting risk assets globally.

This marks a continuation of the trend seen throughout early 2026, with UK equities finding support from commodity-linked stocks even as other sectors struggle. The question is whether this narrow leadership can broaden out or if it signals underlying weakness in the wider market.

Precious metals break records

Silver surged past $90 per ounce for the first time, while gold climbed back above $4600 per ounce. These moves represent a dramatic acceleration of the rally that began in late 2025 and shows no signs of abating despite already elevated levels.

Multiple factors are driving the precious metals higher. The Trump administration's attacks on the Federal Reserve (Fed) have unsettled investors, raising concerns about central bank independence. Widespread geopolitical tensions from Venezuela to Greenland to Iran are adding to the uncertainty.

For London's precious metal miners, the rally has been transformative. However, earnings at the end of the month will provide the real test. Investors will need to see that higher metal prices are translating into earnings growth to justify valuations at or near record highs.

Base metals join the rally

It's not just precious metals enjoying the spotlight. Copper, Nickel, zinc and aluminium are all rising, with tin delivering the most spectacular performance. The metal used in electronics and packaging has already gained 30% this year, surpassing its 2022 peak.

The base metal rally reflects a complex mix of factors. Trump's tariffs have disrupted traditional metal flows, creating supply bottlenecks and pushing prices higher. Supply disruptions at key mines have compounded the situation, tightening markets that were already showing signs of strain.

Fundamental demand is also playing a role, particularly for copper and . AI-related infrastructure requirements are creating sustained demand for these metals, a trend that looks set to continue as data centre construction accelerates globally.

Homebuilders under pressure

Homebuilding stocks fell sharply following Vistry's trading update, which highlighted challenging conditions and lower home sales compared to last year. Vistry itself tumbled as much as 9.3%, its worst performance since April 2025, while Berkeley, Barratt Redrow and Persimmon all trailed the FTSE 100.

The update confirmed what recent data from Nationwide and Halifax had suggested. The housing market ended 2025 on a weak note, with prices falling as buyers remained cautious ahead of the Budget uncertainty.

Vistry's situation is complicated by its focus on partnerships with local authorities and the private rental sector. Funding uncertainty in the first half of last year slowed activity, though affordable housing volumes did jump after the spending review in June.

Bank of England to continue cutting rates

Alan Taylor, a member of the Bank of England's (BoE) Monetary Policy Committee, said UK interest rates should continue their downward path. He expects inflation to fall sustainably to the 2% target in the middle of this year, significantly sooner than the BoE's projection of 2027.

Taylor anticipates that monetary policy will become neutral sooner rather than later, as wage growth cools and underlying price pressures ease. This represents a more dovish stance than the central bank's official guidance, suggesting potential for more aggressive rate cuts.

The substantial trade diversion being seen into the UK could also help bring down inflation. Taylor estimates this could reduce consumer price inflation by over 0.2 percentage points, providing an additional deflationary impulse.

Corporate updates

BP announced impairment charges of $4 billion to $5 billion for the fourth quarter (Q4), mostly related to its gas and green energy businesses. The oil major is pivoting away from renewables towards its core oil and gas operations, a significant strategic shift.

Education publisher Pearson said revenue growth accelerated in the final quarter, with particular strength in its Assessment & Qualifications arm and Virtual Learning division. The shares fell around 5% despite the positive update, a puzzling reaction that may reflect profit-taking after recent gains.

Insurer Prudential hired former HSBC chairman Douglas Flint as its new chairman, replacing Shriti Vadera. Flint brings extensive financial services experience to the role, having led HSBC until 2017.

Recruiter Hays reported a 10% decline in total net fees in the second quarter (Q2), worse than analyst estimates. The weak labour market continues to weigh on the sector, with permanent staff placements particularly soft. This adds to concerns about the health of the UK economy.