Closing post
Time to wrap up….
The UK’s blue-chip stock index hit a record high on Friday, as rising hopes of interest rate cuts this year drove down government borrowing costs.
Almost every share on the FTSE 100 rose on Friday, as a fall in the value of the pound boosted multinational companies listed in London and propelled the index above 8,500 points for the first time.
The “Footsie”, which tracks the 100 biggest London-listed companies, rose 1.6% to hit a fresh intraday high of 8,533.43 points amid growing confidence that the Bank of England will ease monetary policy this year, before closing at 8505 points…
UK government bond prices have also eased back from their recent highs, helped by expectations of interest rate cuts this year.
The International Monetary Fund has upgraded its forecast for UK growth this year in an update to its biannual assessment of the global economy, while taking a swipe at plans by Donald Trump’s incoming US administration for the potentially destabilising effect of large-scale tax cuts, import tariffs and weaker regulations.
In a fillip to the Labour government, the Washington-based organisation said it expected the UK economy to grow by 1.6% in 2025, up from an earlier forecast of 1.5%.
The IMF judged that Labour’s increase in investment spending, improved household finances and a series of interest rate cuts by the Bank of England would give the UK economy a lift, after growing by 0.9% in 2024 according to the fund’s expectations.
The Bank of England will further delay capital rules meant to prevent another 2008-style crash, as it weighs the impact of Donald Trump’s return to the White House and the chancellor Rachel Reeves’s call for regulators to help drive UK growth.
The US supreme court has issued a ruling upholding a nationwide ban on TikTok unless it sells to an owner in the US.
The nine justices voted unanimously in a decision on Friday that sides with the majority of US Congress and the US Department of Justice that the hugely popular social media app is a threat to US national security.
The FTSE 100 has topped off its surge by ending the day at a new closing high of 8,505 points.
Jo Rands, portfolio manager at Martin Currie, says:
“The FTSE100 has hit an all-time high, despite the negative rhetoric around rising gilt yields and the outlook for the UK economy. The large cap index is traditionally a low beta defensive market, which is predominantly composed of very international businesses. The FTSE 100 generates c.80% of its revenues from outside the UK, which also means the weaker pound has been a positive influence for the index.
“The year has started with the index being powered by index heavy weights such as BP and Shell, which have advanced following rising oil prices, and with the Banks benefitting from a pushback on interest rate cuts.
