Britain’s FTSE 100 broke through the psychological 7,000-point barrier for the first time in its 31-year-history yesterday, less than a month after it managed to regain the heights it reached during the dot.com bubble in 1999.
The index of the largest 100 companies listed on the London Stock Exchange closed up 60.19 points at 7,022.51 as stock markets around the world were lifted by hopes central banks would keep interest rates low for longer than expected.
Across the Atlantic, sharp falls in the dollar also helped stocks rally on Wall Street, with the benchmark high-tech Nasdaq index also testing record levels. The dollar suffered its worse week since 2013, nearing parity with the euro as it fell to $1.083 against the single currency. Sterling also regained recently lost ground against the greenback to trade as high as $1.4989, up more than 2 cents.
The US central bank on Wednesday lowered its economic forecasts, prompting economists to revise the date that they expected borrowing costs to start rising in the world’s largest economy back from June to September.
The Bank of England’s chief economist this week also suggested that interest rates here could actually be cut to deal with falling prices, which helped stocks climb. Meanwhile the European Central Bank is pumping cash into the eurozone economy and markets with its €1.1 trillion (£800m) bond-buying stimulus programme.
Chris Beauchamp, a senior market analyst at IG said: “Markets continue to make hay in the aftermath of the Fed meeting this week.
“Last Monday investors were very skittish, worried that the Fed would signal that the first rise in US rates in a decade was getting closer. That fear was fully laid to rest during Wednesday’s meeting and since then we have seen confidence return in force. He added: “After weeks of lagging behind, the FTSE 100 has solidly outperformed its peers in Europe and the US, rising nearly 4 per cent this week for its strongest gain in 2015 so far and the best week since mid-December.”
News on a number of corporate takeovers helped boost UK markets yesterday, including Sabatell’s bid for TSB and the reworking of Lafarge-Holcim’s cement merger, which means CRH’s deal to buy Lafarge’s UK business Tarmac is back on track.
The Irish building supplies group CRH was up 5 per cent, among the top climbers on the FTSE 100 yesterday, while rising oil prices also lifted the blue chip index heavyweights, Shell and BP. The US benchmark price for crude oil ended the day up 4 per cent at $45.72 a barrel, while in London Brent crude rose above $55 a barrel.
The help for the North Sea industry announced in the Budget on Wednesday has also helped oil stocks climb this week.
Meanwhile, the fall in the dollar helped reassure US investors, who have been getting increasing nervous about the impact of their strong currency on the profits of US multinationals.
The dollar has climbed by more than 20 per cent since the middle of last year, a move that initially boosted US shares as investors took it as a sign of a strengthening economy. The sports giant Nike warned this week that the stronger dollar would hit its results this quarter.Reuse content