The FTSE 100 reached an all-time high yesterday, boosted by hopes of a solution to the Greek debt crisis and signs that US interest rates are likely to remain close to record lows.
The Footsie closed up 37.47 points at 6949.63, surpassing the previous highest close of 6930.2, recorded on 30 December 1999, at the height of the dotcom boom. The previous intraday high of 6950.6 was also beaten, as the index peaked at 6958.89.
Market commentators put yesterday’s performance down to progress on Greek debt negotiations and comments from Janet Yellen, chairwoman of the Federal Reserve, indicating that US interest rates will remain low. Stock markets across Europe rose after European Union officials approved a four-month extension to Greece’s reform plans. The FTSE 100 then jumped in late-afternoon trade after Ms Yellen hinted in her bi‑annual monetary policy report to US politicians that rate rises were unlikely before June; she said markets would be warned well in advance.
Tony Cross, an analyst at the investment platform Trustnet Direct, said: “We’ve seen a conciliatory tone struck in the eurozone – they don’t want Greece to leave. A rebound in oil prices earlier in the day helped too, with London-listed energy stocks migrating from their earlier negative stance. But by all accounts the plaudits have to go to Janet Yellen, who gave the markets a far less hawkish interpretation of monetary policy than had been expected – and if interest rates are going nowhere, you might as well be in equities.”
The FTSE 100 has risen almost 6 per cent since the start of the year and stands 13 per cent above its December low point. The rally could continue, with the European Central Bank set to pump billions of euros into the eurozone as part of plans to kickstart growth.
Angus Campbell, senior analyst at FxPro, said: “Equity investors have been riding the wave of cheap money, fuelled by unconventional monetary policies pursued by the world’s central banks. That has allowed this bull market to extend well beyond the duration of your average bull market.”
But Mr Campbell added that investors face “considerable headwinds”. He highlighted the forthcoming general election, an easing off of growth in China and fears of a slowdown in the US as all having the potential to derail the rally.
And Peter Sullivan, HSBC’s head of European equity strategy, said that “in real terms the FTSE 100 is 29 per cent below its all-time high”.