- FTSE 100 nudges past the last record set in May 2023, gaining 1% to reach 8476.
- Mining stocks help lead the charge higher, supported by the weaker pound.
- The defensive nature of the index and its dividend potential is attractive to investors.
- The FTSE 100 had struggled to play catch up, but has caught the ball of investor enthusiasm.
Susannah Streeter, head of money and markets, Hargreaves Lansdown:
‘’The FTSE 100 has caught that Friday feeling, surfing upwards on a wave of enthusiasm, powered by expectations of lower interest rates and a weaker pound. The index jumped in early trade by 1%, cresting past its previous record in May last year.
The blue-chip index is stuffed with global giants, like miners, which benefit from cheaper sterling, and were among the biggest gainers of the morning. The pound fell to $1.21 after a disappointing snapshot of retail sales showing a contraction for the so-called ‘golden quarter’, adding to the picture of stagnation for the UK economy. But it’s provided a tailwind to multinationals and hopes of interest rate cuts from the Bank of England have buoyed investor sentiment.
FTSE 100 stars like Rolls Royce and Nat West, which saw their share prices double over the year, are among the climbers today. The FTSE 100 has been a laggard compared to US indices. They surged higher in 2024, with the S&P 500 gaining more than 23%, helped by big gains among the mighty tech stocks, fuelled by AI optimism. But appetite for UK market is being revived, as investors are attracted by its defensive characteristics in an era of global uncertainty. Sectors like healthcare, utilities, consumer staples and telecoms companies can offer stable returns. The impressive dividend-paying potential is a key attraction to the UK stock market. There are plenty of mature companies boasting strong dividend cover and the potential for income to grow over the long term.
Other sectors like energy are also benefitting from economic trends, with Brent Crude rising in early trade, heading for a fourth weekly gain in a row. After years of trying, and failing, to play catch up, the FTSE 100 appears to have finally caught the ball of investor enthusiasm. Although fresh volatility is expected on global markets after President Trump returns to the White House, there may be more appetite to shelter in the resilience of the UK market, and benefit from stocks which have seen depressed valuations in recent years.’’
