The FTSE 100 index traded near record highs on Thursday morning, briefly touching an intraday peak of 9,301.5 before pulling back to 9,289, as gains in defense and energy stocks were offset by sharp declines in WH Smith and Hays.
Shares of WH Smith plunged as much as 33% after the retailer revealed an accounting error in its North American business that overstated profits by around £30 million. The company now expects divisional trading profit for the year ending August 31 to be about £25 million, far below earlier market forecasts of £55 million.
Group profit before tax and exceptional items is now projected at £110 million, compared with consensus expectations of £157 million.
Premier Foods has acquired Merchant Gourmet, a ready-to-eat pulses and grains brand, for £48 million. The FTSE 250 firm, which owns Mr Kipling and Bisto, said the deal taps into growing demand for healthier meal options. Merchant Gourmet, founded in 1995, is expected to deliver £28 million in revenue by March 2026.
Recruitment firm Hays also weighed on market sentiment after reporting a 66% drop in annual underlying profit to £32.2 million for the year to June 30. Net fees fell 11%, with permanent recruitment down 17% and temporary placements lower by 7%.
The company slashed its dividend to £1.24 per share, down from £3 last year, citing ongoing weakness in hiring trends. Shares hit a multi-year low of £59.5, down more than 25% year-to-date.
Despite these setbacks, the FTSE 100 held ground thanks to strength in defense and aerospace stocks. BAE Systems rose £31 to £1,758, while Rolls-Royce advanced £15.5 to £1,041.5, recovering from earlier profit-taking.
Energy majors also provided support, with Shell and BP gaining as Brent crude prices climbed above $67 a barrel, helped by a larger-than-expected drawdown in US oil inventories.
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Meanwhile, UK borrowing data for July came in below expectations, at £1.1 billion versus £2.6 billion forecast, marking the lowest July borrowing in three years. Strong tax receipts boosted government revenues, though total borrowing for the financial year to date remains £60 billion, one of the highest levels.
Market analysts noted investors’ appreciation of the FTSE’s defensive qualities and dividend strength, with companies like utilities and consumer staples remaining attractive amid global uncertainty.
The FTSE 100 continues to show resilience, only dragged by corporate failures at WH Smith and Hays, underlined by strong defensive sectors. Traders are also looking at the upcoming PMI surveys as indicators of inflation and the labor market, since these reports may lead to a rethink of monetary policy expectations ahead of Jackson Hole.
With global headwinds from US tariffs, persistent inflation, and geopolitical tensions, the FTSE’s ability to remain near record highs underscores its role as a defensive haven for investors.