The FTSE 100 experienced a decline on Thursday, closing down 20.41 points, or 0.2%, at 10,867.89, even as major companies like WPP and Diageo reported strong financial results. In contrast, the FTSE 250 saw a rise, finishing up 62.79 points, or 0.3%, at a record 24,695.42. Meanwhile, the AIM All-Share increased by 5.35 points, or 0.7%, closing at 787.13. The contrasting fortunes of these indices reflect ongoing pressures within the UK economy, particularly in the construction sector.
Construction Sector Shows Signs of Improvement
Recent data from the S&P Global UK construction purchasing managers’ index indicated a slight easing in the pressure faced by the construction industry. The index climbed to 44.7 in July from 38.4 in June, marking its highest reading in four months and surpassing expectations of 41.5. However, it remains below the critical 50-point mark that delineates growth from contraction, extending the downturn in the sector to seven months.
All three principal construction sectors reported slower declines, with commercial activity showing resilience at 46.8. Housebuilding contracted at a more tempered pace of 41.8, while civil engineering lagged behind at 38.3. The data also revealed that new orders continued to fall for the seventh consecutive month but at the slowest rate since September 2025.
Currency and Commodity Movements
On the currency front, the pound traded at 1.3454 dollars by Thursday afternoon, down slightly from 1.3466 at the previous day’s close. However, it appreciated against the euro, rising to 1.1675 from 1.1663. In commodities, Brent crude oil for October delivery saw an uptick, trading at 81.74 dollars a barrel, up from 79.47 on Wednesday.
European equities presented a mixed picture, with France’s CAC 40 rising by 0.4% and Germany’s DAX 40 edging up by 0.1%. However, retail sales figures for June in the eurozone fell short of expectations, recording a 0.3% decline from May, contrasting with a forecasted slight increase.
Corporate Highlights: WPP and Diageo’s Strong Performance
In the corporate arena, Diageo’s stock surged by 5.6% following a robust earnings report and the unveiling of a new strategic plan by CEO Dave Lewis, aimed at enhancing operational efficiency. Lewis expressed confidence in the company’s ability to consistently generate shareholder value with this new approach.
Similarly, Admiral saw a rise of 5.2% as it reported favourable early pricing adjustments in its motor division, positioning the firm well for a market rebound. In the housing sector, Persimmon’s shares increased by 2.9% after it reported better-than-expected interim results, although the company acknowledged ongoing challenges related to affordability and construction costs.
Conversely, WPP’s stock soared by an impressive 29%, following its affirmation of annual guidance after experiencing a “sequential improvement” in its second quarter. This marks a notable turnaround for the company, which was relegated from the FTSE 100 for the first time in nearly three decades in December 2025.
Looking Ahead: US Jobs Report on the Horizon
As we look towards Friday, the UK corporate calendar will feature half-year results from the Renewables Infrastructure Group. In the United States, attention will turn to the July jobs report, which is anticipated to reveal a non-farm payroll increase of around 80,000, with the unemployment rate expected to remain steady at 4.2%.
Market analysts, including Kathleen Brooks from XTB, have highlighted the significance of this report, especially in light of the Federal Reserve’s recent shift to a more reactive stance on interest rates. Strong payroll figures could elevate Treasury yields and bolster the dollar, while weaker results might dampen expectations for rate hikes.
Why it Matters
The fluctuation in the FTSE 100, despite positive corporate earnings from leading firms, underscores the complex and often volatile nature of the UK economy. With the construction sector still grappling with challenges, and upcoming economic indicators poised to influence financial markets, businesses and consumers alike will be closely monitoring these developments. The interplay between strong corporate results and broader economic pressures illustrates a critical moment for investors as they navigate uncertainty in both domestic and global markets.
