The FTSE 100 crossed the 8000 barrier today, after a strong afternoon session
(Kirsty O’Connor/ PA)
(Picture: PA Wire)The FTSE 100 crossed the 8000 barrier today, after a strong afternoon session.
The index of top London-listed companies has repeatedly broken records this month, after crossing 7900 on 3 February. It achieved end-of-day records on each of the previous four days of trading, and came within four points of 8000 on Tuesday.
However, after hitting a low of 7928 soon after trading opened this morning amid disappointing results from Barclays and relatively modest declines in inflation, it appeared that the FTSE was unlikely to break through the barrier today.
Yet the index gained 50 points after 1:30pm, taking it beyond the major milestone. At its highest point today, the FTSE reached 8003.65.
It is the first time the FTSE has crossed a new multiple of 1000 since 2015, when it surpassed 7000 for the first time.
The afternoon rally comes as the pound declined in value against the dollar and euro, which made UK shares more appealing overseas, driving the index up. The pound is down 1.5% against the dollar to $1.20 and down 0.8% against the Euro to €1.12 so far today.
John Moore, senior investment manager at RBC Brewin Dolphin, said the recent run of record days after years of stagnation shows how quickly things can change in finance.
“The FTSE 100’s rise from being an out-of-favour index to new record highs shows how quickly the investment world can change,” he said. “During the Covid-19 pandemic, tech companies and growth stocks were massively in fashion – precious few of which are included on London’s main index.
“Now, with inflation persistently high, elevated oil prices, and interest rates rising the consumer staples giants, oil and gas explorers, mining groups, and financials that make up the FTSE 100 are looking at a much more supportive near-term environment.
“It is a salutary lesson that every dog has its day. While the story of the past decade was very much about the rise of the tech sector, the perennially forward-looking stock market sees a very different 10 years in front of us with cash generation, resilience, and self-funded growth likely to offer options to businesses and investors looking to navigate the challenges ahead and maximise opportunities.”
However, Laith Khalaf, head of investment analysis at AJ Bell, noted that the new record high may not be entirely good news for the UK economy as a whole.
“This silver lining isn’t entirely shorn of a cloud however, because much of the success of the UK stock market over the last year can be traced back to Russia’s invasion of Ukraine,” he said. “This helped buoy the share prices of the oil and gas sector, and the financial sector too, as the fight against increased inflation has meant interest rates have also had to rise, boosting bank reserves.
“A weak pound has also helped propel the Footsie upwards, thanks to all the overseas earnings made by the companies within it. It’s notable that the last calendar year in which the FTSE 100 outperformed the S&P 500 was in 2016, when the pound also took a hammering following the EU referendum.
“But while a weak pound may be a shot in the arm for the UK stock market, it is also a vote of no confidence in the UK economy.”
The initial spell above 8000 was brief, as the index of blue-chip companies quickly dropped back into the 7990s, eventually closing at 7997.83. This figure, though, still broke yesterday’s closing record.
