Closing post
So, with the FTSE 100 ending the day at a record closing high, it’s time to wrap up.
Here are today’s main stories:
Nils Pratley: slowing economic growth and a FTSE record high can coexist
The UK will be the only G7 country to see its economy shrink this year, the International Monetary Fund predicted this week.
The stock market, on the other hand, is doing just fine, our financial editor Nils Pratley writes. Almost five years after its last closing high, the FTSE 100 index hit a new one on Friday.
Can nonexistent growth and rising share prices make sense? Actually, yes. The main factors driving the index to 7901.80 are all explicable.
First, remember what’s being measured. A stock market index is not a symbol of national economic virility, which is especially true for the FTSE. This collection of the 100 largest qualifying companies listed in London could hardly be more international – try a Chilean copper miner (Antofagasta) or producers of silver and gold in Mexico (Fresnillo).
Even distinctly British names at the top of the size-weighted index are best thought of as multinationals. Shell, the biggest of the lot, makes less than 5% of its revenues in the UK. AstraZeneca, in second slot and a UK national champion in pharmaceuticals (with joint Swedish parentage), generates more of its sales in the US. In aggregate, about 75% of FTSE 100 firms’ revenues come from outside the UK.
Second, stock markets anticipate events. The possible new development being priced up is that the global inflation shock will not be as severe as feared, the downturn will be shorter than previously expected and central banks will not push interest rates as high as they have threatened. None of these things is guaranteed to happen, but markets tend not to wait for proof….
Here’s Nils’ full analysis:
