Home Money Footsie hits new record as economy recovers

Footsie hits new record as economy recovers

0 comment
Footsie hits new record as economy recovers

The London stock market continued its record run yesterday as the economy emerged from recession and investors bet that interest rates could be cut next month.

In another bullish session for savers with money tied up in shares through pensions, ISAs and other investments, the FTSE 100 broke above 8,400 for the first time to hit an all-time high of 8,455.

It ended the day up 0.6 percent, or 52.41 points, at 8,433.76 – its best ever close – as analysts declared that “the environment is changing” after a prolonged period of pessimism about the economy. of the United Kingdom and the stock market.

The blue-chip index has gained almost 10 per cent this year, adding £175 billion to the value of the stock market’s 100 largest companies.

The rebound came as official figures showed the economy grew 0.6 percent in the first quarter of the year, ending last year’s brief recession.

The economy looks set to get a fresh boost this summer after the Bank of England this week gave its strongest signal yet that interest rate cuts are on the way.

Susannah Streeter, head of money and markets at investment platform Hargreaves Lansdown, said: “It’s clear that a turn has been made.”

He added: “Confidence breeds more optimism, and with the economy showing signs of recovery and the FTSE 100 rising, the glass-half-full sentiment is settling in.”

“The blue-chip index has risen and set new records after a glow of positivity has descended on the UK.”

Russ Mould, chief investment officer at brokerage AJ Bell, said share prices remain cheap and may have to rise further given the prospect of interest rate cuts.

“It seems like the rate environment is changing,” he said.

‘The UK market still feels very cheap on earnings and is still not very appreciated. “If people decide to change their minds, it could be quite interesting.”

Bank of England Governor Andrew Bailey said this week that the fight against inflation was “moving in the right direction” and hinted that rates could be cut as early as next month.

Based on bets in financial markets, there is a close to 50-50 chance of a rate cut in June – when the Bank’s rate-setting committee meets – and Bailey declared that such a move was “not off the table nor a given.” accomplished”.

The Bank of England raised interest rates to 5.25 per cent as it battled rising inflation, taking a painful toll on borrowers, many of whom saw hundreds of pounds added to their mortgage bills.

But after hitting a four-decade high of 11.1 percent at the end of 2022, inflation fell to 3.2 percent in March and is expected to have fallen further in April thanks to lower energy bills.

Declaring that inflation will fall back to around the 2 percent target in the coming months, Bailey said: “We are now returning to more normal times.”

You may also like