The FTSE 100 was set to open lower on Thursday after the US Federal Reserve held interest rates steady and Donald Trump escalated attacks on Iran, both fuelling investor concerns about rising inflation. Futures pointed to a drop of around 0.6% after the index had touched a record high of 10,951 points on Wednesday, before slipping back to 10,864 by the close, as global markets reacted nervously to the Fed's decision and the lack of clarity from its new chair, Kevin Warsh.

Analysts at Deutsche Bank said the market moves stemmed from the "on-hold" Fed decision combined with limited detail from Warsh, who was appointed by Trump on a mandate to cut rates but now faces pressure as US-Israeli strikes on Iran push oil prices higher. Bond yields rose after the Fed meeting and the S&P 500 closed 1.52% lower, with chip stocks also hit hard. In the UK, falls on the FTSE 100 were expected to be softened by strong results from BAE Systems, Lloyds Banking Group, London Stock Exchange Group and Shell, while Rolls-Royce raised its full-year profit guidance to between £4.7bn and £4.9bn.