The FTSE 100 closed at a record high yesterday as easing tensions in the Middle East and hopes of interest rate cuts in the UK sent shares soaring.
On a bumper day for savers with money tied up in the stock market through pensions, Isas and other investments, the blue-chip index closed up 1.6 per cent, or 128.02 points, at 8,023. 87.
That eclipsed the previous record close of 8,014 in February last year.
The FTSE 250 posted healthy gains (up 1.1 per cent, or 208.09 points, to 19,599.39) amid increased acquisition activity, although it remains some way off its peak of 24,353 in September 2021.
The rally came as the absence of further violence between Iran and Israel over the weekend fueled hopes that an all-out war in the Middle East could be avoided.
New high: On a great day for savers with money tied up in shares through pensions, Isas and other investments, the blue chip index closed up 1.6% or 128.02 points at 8,023.87
Nearby economic factors also played a role, as investors bet that the Bank of England will press ahead with interest rate cuts in the coming months.
According to bets on financial markets, there is a 50% chance the first UK cut will come in June and a 75% chance it will be in August, lifting rates from a 16-year high of 5 .25% to 5%.
Rates are then expected to fall to 4.75 percent or possibly 4.5 percent by the end of the year.
The prospect of lower interest rates boosted stock prices as investors sought better returns in the stock market.
At the same time, with the Bank of England expected to cut rates ahead of the US Federal Reserve, the pound fell to $1.23 against the dollar for the first time since November.
A weak pound tends to boost the Footsie because many of the big multinationals in the index earn their income in foreign currencies.
The lower the value of the pound sterling, the more this income is worth when converted to pounds.
Susannah Streeter, head of money and markets at brokerage Hargreaves Lansdown, said: “London’s blue-chip index has seen a surge in power as geopolitical tensions have eased and investors have assessed the improved outlook for the economy. of the United Kingdom, with interest rate cuts in sight. on the horizon.’
The Footsie is just below the intraday high of 8047, also reached in February 2023.
The stock market rally came at the start of a week packed with corporate earnings on both sides of the Atlantic. In the UK, companies updating investors include Lloyds, Barclays and Natwest, as well as Astrazeneca, Unilever, Reckitt Benckiser, Sainsbury’s and the London Stock Exchange Group.
In the United States, four of the so-called Magnificent Seven report results this week, starting with Tesla tonight, followed by Facebook owner Meta tomorrow and Google parent Alphabet and Microsoft on Thursday.