FTSE 100 headed for a new record high

Strong Hiscox Ltd (LSE:HSX) results and interest in the recovery potential of BP (LSE:BP.) and Diageo (LSE:DGE) today placed their shares among the front-runners as the FTSE 100 index headed for another record.

The specialist insurer’s shares traded at their highest level in more than five years after annual results included an upscaling of its share buyback programme to $275 million (£206 million).

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Strong capital generation underpinned the increase of $100 million and 9% rise in interim dividend to 14.4 US cents a share, while Hiscox’s half-year profit of $276.6 million beat City expectations by 30%.

Investment gains and reserve releases meant the results were only slightly lower than the $283 million of a year earlier, despite losses from California wildfires in the most recent period.

The performance comes as Hiscox strives for growth through the insurance cycle by striking a balance between catastrophe-exposed business and less volatile local specialty business.

Retail premiums grew by 6% to almost $1.4 billion in the period, which was broadly in line with the guidance amid softening rate environments in reinsurance and the London market.

Chief executive Aki Hussain said: “Growth and earnings momentum continues to build in Retail as we capture the vast structural opportunities, and we are selectively deploying capital into attractive opportunities across our diverse big-ticket businesses.”

Shares rose 109p to 1,369p but Peel Hunt and Bank of America highlighted further upside in the wake of the results based on price targets of 1,460p and 1,500p respectively.

Hiscox, whose shares have risen by more than 20% this year, led the FTSE 100 in a session when the benchmark appeared on track to beat last night’s record close of 9,142.73.

Stronger Shell (LSE:SHEL) and BP shares offered support, with the latter now up by 7% this week after second-quarter earnings and cash flow beat forecasts and the company announced a significant hydrocarbon discovery in Brazil - the largest by BP in 25 years.

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Chief executive Murray Auchincloss also disclosed a business review to ensure that BP is maximising shareholder value moving forward.

UBS said today: “The path to recovery is now clearly under way, which is encouraging to see.”

The bank lifted its price target to 425p but maintained its Neutral rating, noting a still high net debt balance and impression that the shares do not stand out as especially cheap.

They have recovered from as low as 331p in April to today’s 428p but had been above 500p last year. Among other BP upgrades in the wake of yesterday’s results, RBC Capital Markets lifted its price target by 20p to 470p and switched to a sector perform rating.

A post-results advance also continued into a second day for Diageo after the drinks giant’s more optimistic 2026 guidance lifted shares by another 60p to 1964p. They are 6% higher this week.

Against the backdrop of a persistently weak global spirits industry, UBS said Diageo had given investors better earnings visibility over the next 12 to 18 months as it doubles down on productivity measures.

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About half these savings will be re-invested, with the balance dropping to the bottom line and boosting hopes of an end to the two and a half year earnings downgrade cycle.

UBS believes a return to growth in US spirits is key for a re-rating, although it adds that the achievement of 4% group-wide organic sales growth by the end of the 2026 financial year could “go a long way to building momentum to the equity story”.

Berenberg, which left its price target at 2,372p, said today that shares do not discount much enthusiasm by trading on a forecast 2026 price/earnings multiple of 14.2 times.

It added: “Diageo is still a work in progress until new management is appointed, disposals are executed and the top line is decisively turned around.”