Rolls-Royce lifted full-year profit and free-cash-flow guidance after a strong 1H, underscoring operational recovery in civil aerospace and resilient demand in defence and power systems. However, broader risk appetite is constrained as the Fed held rates, bond yields rose, and escalating Iran-related tensions amplify inflation and energy-price uncertainty. UK equities opened flat to lower, with idiosyncratic earnings strength offset by macro and geopolitical headwinds.
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Rolls-Royce reported underlying profit before tax of £2.5bn for the first half of 2026, up 48% year on year, as revenue rose by £2bn to £11.3bn. The company raised its full-year outlook for underlying operating profit to £4.7bn-£4.9bn and lifted its free cash flow forecast to £3.8bn-£4.0bn. It said the results reflected a sustained recovery in its civil aerospace business and progress in its turnaround efforts. The FTSE 100 was flat as markets digested the Federal Reserve holding interest rates and Iran’s military action.