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FTSE 100 Surges Above 8,000 For First Time Ever, As Wave Of Optimism That Inflation Can FINALLY Be Tamed Swept Markets
- The London blue chip index hit an all-time high of 8,003.65 earlier today
- It later ebbed to close at 43.98 at 7997.83 points
- A wave of optimism followed news that inflation slowed to 10.1% in January
The FTSE 100 rose above 8,000 for the first time today on hopes inflation may have peaked, allowing the Bank of England to slow or halt rate hikes.
The London blue chip index reached a record high of 8,003.65 today before sliding back to a closing price of 43.98 at 7997.83. The more domestically focused FTSE 250 ended 154.36 at 20172.59.
The wave of optimism followed this morning’s news that inflation slowed to 10.1 percent in January, down from 10.5 percent the previous month and well below its peak of 11.1 percent in October.
A pound bought $1.20 in the currency markets as traders also reacted to the easing of inflation in the US, which yesterday reported a 6.4 percent reading for January, down from 6.5 percent the previous month.
Partying in the city: The FTSE 100 hit 8,000 for the first time ever today
“The FTSE 100 is up 6% year-to-date and has crossed the unprecedented 8,000 mark for the first time,” said Sophie Lund-Yates, principal equity analyst at Hargreaves Lansdown.
The overarching reason for the increase is renewed optimism that inflation has peaked, paving the way for central banks to introduce some slack when it comes to monetary tightening.
“The UK’s inflation reading has been an important milestone given wider concerns about the country’s particularly harsh report from the IMF recently.”
“Recent momentum has been astonishingly fast and highlights that the outlook for UK plc has turned. Fundamentally, however, sentiment can change quickly, depending on the outcome of central bank decisions.’
Laith Khalaf, head of investment analysis at AJ Bell, said: ‘The 8,000 level is a purely psychological milestone, but investors in the UK stock market will nevertheless be happy to count their coffers after a year in which it has been one of the best performers. major markets.
“Pension and Isa valuations will look quite healthy thanks to the performance of the FTSE 100 and indeed the continued rebound in the US stock market since the turn of the year.
This silver lining is not completely stripped of a cloud, however, as much of the UK stock market’s success over the past year can be traced back to the Russian invasion of Ukraine.
“This helped boost share prices in the oil and gas sector, as well as in the financial sector, as the fight against increased inflation also forced interest rates to rise, boosting bank reserves.
“A weak pound has also contributed to the rise of the Footsie, thanks to all the foreign income from the companies in it.”
John Moore, senior investment manager at RBC Brewin Dolphin, said: “The rise of the FTSE 100 from an out-of-favor index to new all-time highs shows how quickly the investment world can change.
“During the Covid-19 pandemic, tech companies and growth stocks have been hugely fashionable – very few of which are on London’s main index.
“With inflation remaining high, oil prices rising and interest rates rising, the consumer goods giants, oil and gas explorers, mining groups and financials that make up the FTSE 100 look to a much more favorable near-term environment.”