The FTSE 100, London’s premier stock index, has soared to its highest ever level yet, with the ongoing share rally showing no signs of abating. Exceeding last year’s intraday record of 8,047.06 (February), the increase is attributed to bolstered investor morale owing to easing geopolitical tensions and an improved economic climate. This comes after a triumphant performance on Monday where the blue-chip index settled at a record-breaking 8,023.87 following a surge of more than 1.6%.
Retailers and financial sectors led the conquest in Tuesday’s early trading session, propelling the FTSE 100 to highs around 8,075. Only a few stocks kicked off the day in the red, which included some top miners on the index.
Financial analysts have indicated that anticipations of a potential UK interest rate cut, thanks to an inflation rate inching towards its 2% target level, could be fuelling the rally. Lindsay James, investment strategist from Quilter Investors, said: “With economic growth still lagging for many of its G7 peers, the UK has turned this to its strength in the fight against inflation, which last month fell below that of the US and saw Bank of England Governor Andrew Bailey announce that this data shows the UK is ‘pretty much on track’ with the central bank’s forecasts.”
Further adding that these events have led investors to forecast that interest rate cuts could “arrive in the UK well before the US”, which in turn has contributed to the pound weakening against the American dollar. The FTSE 100 is home to numerous large international firms that generate their earnings in dollars but report them in pounds. This means they become more profitable when the dollar strengthens, which is beneficial for UK-based investors and gives a lift to London’s stock markets.
