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Engineering stocks shone on Thursday in London, helping to offset softer mining stocks; meanwhile the takeover frenzy in UK equity markets continued. The FTSE 100 closed up 56.32 points, 0.5%, at 10,572.24. The FTSE 250 ended up 253.44 points, 1.1%, at 23,715.83, and the AIM All-Share rose 0.44 of a point, 0.1%, at 766.18. The Cboe UK 100 ended up 0.4% at 1,048.60, the Cboe UK 250 was up 1.4% at 20,489.22, but the Cboe Small Companies ended down 0.4% at 18,417.55. Sterling faded into the close after earlier hitting its highest level in a year against the dollar amid growing expectations that Home Secretary Shabana Mahmood will become chancellor under the incoming government led by Andy Burnham. Mahmood has emerged as the frontrunner to replace Rachel Reeves at the Treasury when Burnham is expected to enter Downing Street on Monday, after weeks of speculation over his Cabinet appointments. Energy Secretary Ed Miliband had previously been viewed as the leading contender for the role but is considered less favourably by financial markets amid concerns he would be less fiscally disciplined. Meanwhile, the International Monetary Fund is urging Andy Burnham’s incoming government to avoid increasing public spending in the face of pressures such as rising household energy bills. The pound traded at $1.3483 on Thursday afternoon, little changed from $1.3486 on Wednesday. It had earlier traded as high as $1.3558. Against the euro, sterling eased to €1.1784 from €1.1791 on Wednesday. Sterling had risen sharply late Wednesday as the first reports that Mahmood might get the keys to number 11 Downing Street started to emerge. The pound had traded at $1.3396 at the time of the London equity market close on Tuesday. Kathleen Brooks, research director at XTB said the pound’s positive reaction tells us two things about Andy Burnham‘s government. ‘Firstly, the market trusts Mahmood to take a sensible approach to economic policy, and to tackle the hard questions of welfare spending, secondly, Burnham is willing to have those to the right of the Labour party in his cabinet in key economic roles.’ Investors also weighed figures showing the UK economy returned to modest growth in May, although the recovery remained subdued as the conflict in Iran continued to weigh on activity through higher prices and supply chain disruption. According to the Office for National Statistics, gross domestic product rose 0.1% in May after contracting 0.1% in April, matching market expectations. A 0.3% expansion in the services sector offset declines of 0.5% in production and 0.8% in construction. Over the three months to May, GDP grew 0.7%, easing slightly from an upwardly revised 0.8% increase in the three months to April. Deutsche Bank’s Chief UK Economist Sanjay Raja expects momentum to dampen a bit as the year progresses. The Iran ‘energy squeeze will eventually catch up with households and businesses, constraining spending and investment’, while lingering geopolitical uncertainty around the Strait of Hormuz ‘won’t help either’, he said. In European equity markets on Thursday, the CAC 40 in Paris ended down 0.1%, while the DAX 40 in Frankfurt fell 0.3%. In New York, the Dow Jones Industrial Average was up 0.3%, the S&P 500 was 0.1% lower and the Nasdaq Composite declined 0.7%. Taiwanese chipmaker TSMC fell 2.7% in New York as trading got underway, even as it issued positive forward guidance and announced that net profit soared more than 77% to a record high in the second quarter thanks to massive demand for AI hardware. ‘This all makes one wonder what US tech corporations will have to come up with to get investors genuinely excited again,’ said market analyst David Morrison at Trade Nation. ‘This is important, as the earnings season picks up several gears over the next fortnight,’ he added. Further, TSMC said it will invest an additional $100 billion in the US state of Arizona. Netflix reports after New York markets close on Thursday, while next week, Google’s parent company Alphabet as well as Tesla release results. Amazon, Apple, Meta and Microsoft are among the companies that publish results the week after. The US 10-year Treasury yield traded at 4.57% on Thursday, stretched from 4.56% on Wednesday, and the US 30-year Treasury yield widened to 5.10% from 5.08%. The euro traded higher against the greenback, at $1.1444 on Thursday against $1.1437 on Wednesday. Against the yen, the dollar was trading at JP¥162.43, up from JP¥162.13 on Wednesday. Brent crude for September delivery traded higher at $84.75 a barrel on Thursday, from $83.71 at the time of the London equity market close on Wednesday. Gold traded at $4,014.58 an ounce on Thursday, down from $4,048.39 on Wednesday. The fall in the price of the yellow metal weighed on Fresnillo, down 2.4%, and Endeavour Mining, down 2.6%. Diploma led the FTSE 100 risers, climbing 6.3% after raising its full-year guidance for the third time in five months following what it described as a ‘very strong’ third quarter. The firm now expects organic revenue growth of 14%, up from previous guidance of 12%, while operating margin is forecast at around 26.5%, compared with 25% previously. The upgraded outlook implies adjusted operating profit around 7%, above analyst consensus of £454 million. Elsewhere, the takeover frenzy in UK equity markets continued with Rotork and Gooch & Housego among those accepting offer proposals. Rotork soared 67% after agreeing to a £4.14 billion cash takeover by Swiss engineering group ABB. ABB will pay 506 pence per share in cash, representing a 73% premium to Rotork’s Wednesday closing price. The deal values the Bath-based flow control specialist at £4.14 billion on a fully diluted basis. The bid for Rotork drove buying interest in FTSE 100-listed engineers Weir Group and Spirax Group which climbed 4.0% and 4.2%. While Somerset, England-based photonic components & systems maker Gooch & Housego, jumped 39%, as it accepted a £345.6 million bid from Bethesda, Maryland-based buyout fund Arlington Capital Partners VII LP, worth 1,234.9 pence per share, including a 4.9p per share interim dividend. The offer values G&H at £345.6 million on a fully diluted basis, implies an enterprise value of £400.5 million, and a multiple of around 25.9 times G&H adjusted operating profit for the twelve-months ended March 31, 2026. Elsewhere on the FTSE 250, trading updates boosted Dunelm, up 5.3%, and Funding Circle, up 5.8%, but pegged back Ocado, down 10%, and Trustpilot, down 11%. On Ocado, JPMorgan analyst Marcus Diebel said first half revenue was broadly in line and earnings ‘modestly light’ by 2%, driven by a more notable 7% miss in the key Tech Solutions division. The ‘bigger issue’, in Diebel’s view, is cash flow with first half underlying cash outflow of £147 million versus his £110 million forecast, meaning attainment of management’s £200 million full-year guidance requires a ‘meaningful sequential improvement’ to enable delivery. The biggest risers on the FTSE 100 were Diploma, up 425.00p at 7,195.00p, Metlen Energy & Metals, up 2.26p at 43.66p, Spirax, up 280.00p at 6,930.00p, Kingfisher, up 11.80p at 297.10p and Weir Group, up 96.00p at 2,504.00p. The biggest fallers on the FTSE 100 were St James’s Place, down 94.00p at 1,110.00p, Antofagasta, down 154.00p at 3,588.00p, Endeavour Mining, down 92.00p at 3,422.00p, Fresnillo, down 60.00p at 2,455.00p, and Centrica, down 4.15p at 172.05p. Friday’s global economic calendar has eurozone CPI figures, US industrial production data and the Michigan consumer sentiment index. Friday’s local corporate calendar has a trading statement from luxury goods retailer Burberry and half year results from private equity firm company Bridgepoint. Copyright 2026 Alliance News Ltd. All Rights Reserved.
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