Feb 15, 2023
FTSE 100 Tops 8,000 for First Time on UK Bluechip Comeback
, Bloomberg News
(Bloomberg) -- The FTSE 100 Index rose above 8,000 points intraday for the first time, with gains in heavyweights and a drop in sterling boosting the UK’s large-cap stock index on Wednesday.
The benchmark closed 0.6% higher to notch a fresh record, after breaching its May 2018 peak earlier this month. It reached an intraday high of 8,003.7 points, boosted by heavyweights including Shell Plc and British American Tobacco Plc and also helped by a drop for the pound after Wednesday’s inflation data.
Having managed to avoid a selloff last year, and outperforming the MSCI World Index for the first time in a decade, the FTSE has extended gains in 2023 amid a global equities rally - albeit at a slower pace. The gauge — dominated by firms like HSBC Holdings Plc that get most of their sales outside the UK — typically benefits from weaker sterling. The pound fell about 10% last year.
“Relatively speaking the index has held firm over the last year despite market volatility, though market participants should be careful not to interpret this record threshold as a sign of a truly healthy market,” said Mike Horan, head of EMEA trading at BNY Mellon Pershing.
The FTSE 100’s heavy weighting of commodity stocks helped its advance in the past year, while recent strong earnings reports from the likes of oil giant BP Plc, pharmaceutical firm AstraZeneca Plc and consumer goods maker Unilever Plc also helped. Investors in UK large caps are also enjoying solid dividends, with one of the highest payout yields globally.
Still, there are plenty of risks ahead. A recovery for the pound, a stalling commodities rally and still-high inflation in the UK hurting consumer spending may start to weigh on the benchmark. The gauge has underperformed global peers in 2023.
UK Stocks Just Hit a Record. That Might Be as Good as It Gets
“I don’t see the FTSE 100 as giving any endorsement to the view that the economic outlook in the UK is improving at all at this time,” said Mark Dowding, chief investment officer at BlueBay Asset Management.
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