FTSE 100 surpasses 8,500 to hit new record on hopes of rate cuts to boost flat economy
The FTSE 100 has reached a high of 8,500, beating a previous closing record of 8,474 last May.
The new all-time closing record came thanks to a weaker pound, which traded at $1.22 against the dollar, and expectations of further interest rate cuts to stimulate a flat economy.
Bitcoin also rose to $104,882 ahead of the inauguration of Donald Trump, who may build up a strategic reserve of cryptocurrencies during his second term as US president.
The FTSE 100 has breached the 8,500 mark on expectations of future rate cuts by the Bank of England to stimulate a flat economy
Financial, mining and construction stocks were among the top gainers on the FTSE 100, which ended the day 1.4 percent or 113.32 points higher at 8,505.22.
The domestically focused FTSE 250 posted a more modest gain of 0.3 percent to end at 20,597.42.
“The FTSE 100 has taken that Friday feeling and is riding a wave of enthusiasm,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
‘The blue-chip index is full of global giants, such as miners, who are benefiting from the cheaper pound sterling, and were among the morning’s biggest winners.’
She says the pound fell after this morning’s disappointing retail sales snapshot showed a contraction for the so-called ‘golden quarter’ late last year, adding to the picture of stagnation for the UK economy.
‘But it has given multinationals a tailwind and hopes of rate cuts from the Bank of England have boosted investor sentiment.’
Jo Rands, portfolio manager at Martin Currie, part of Franklin Templeton, says the FTSE 100 record was reached despite negative rhetoric around rising government bond yields and the outlook for the UK economy.
“The large cap index is traditionally a defensive, low-beta market, consisting mainly of highly global companies,” she says.
‘It generates around 80 per cent of its revenue outside Britain, which also means the weaker pound has had a positive impact on the index.’
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