FTSE 100 hits yet another record closing high

The index’s most recent climb was largely the result of a cautious US Federal Reserve and the outcome of elections in the Netherlands

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The FTSE 100 eked out yet another all-time closing finish on Friday, building on its slew of recent records and indicating that its fierce rally over recent months is not yet running out of steam.

The index closed the session 0.1 per cent higher on the day, taking its gains for the week to just over 1 per cent.

“Touch and go but the bulls just nudged it over the line in end,” said Neil Wilson, an analyst at ETX Capital.

This week’s climb was largely the result of a cautious US Federal Reserve combined with elections in the Netherlands that saw anti-EU candidate Geert Wilders garner fewer votes than expected.

Late Wednesday the Fed lifted its funds rate by 25 basis points as expected, to a range of 0.75 per cent to 1.00 per cent. But it also said that further increases would only be “gradual”.

A more hawkish approach would have carried the risk of unnerving investors in assets considered relatively risky, like equities, as well as emerging market currencies, stocks and bonds.

The central bank’s dovish tone also sent the dollar falling. A weaker dollar tends to make commodities, which are generally priced in dollars, more attractive to buy.

The FTSE 100 has huge exposure to commodity companies, via the likes of Anglo American, Rio Tinto and Glencore, so any moves in those stocks have an outsized impact on the index as a whole.

Separately, economists said that the Dutch election outcome had likely dealt a blow to political populism and fragmentation in Europe. Economists had previously forecast that a victory for the populist party would have unnerved investors and sent stocks lower.

“It is perhaps encouraging to see centrist parties holding the day across Europe,” said Mark Dowding, co-head of investment grade debt at asset manager BlueBay. He added, however, that the “biggest test of this comes in the French elections”.

On Friday, financial shares lead the way on the FTSE 100 for most of the session, before retreating slightly.

Shares in brokerage Panmure Gordon, listed on the FTSE’s AIM index for smaller companies, surged more than 60 per cent after ex-Barclays chief executive Bob Diamond and a Qatari investment fund said that they were snapping up the group.

And analysts’ said that the slowing in the bluechip index’s rally on Friday was unlikely to be the beginning of a more significant correction.

“Short term traders typically avoid holding positions over the weekend, and perhaps today is highlighting that fact, with profit taking evident after yesterday’s initial spike higher,” Joshua Mahony, a market analyst at IG said.