New record close for leading index
Blue chips on the rise as FTSE100 surges past 7,000 for first time
The leading index closed up 0.9% at 7,022.51 pts, after hitting a new intraday peak of 7,024.21 pts.
Easing of worries over Greece and a combination of benign economic indicators gave renewed impetus to investors to pour money into equities.
London is not the only market enjoying record levels. Germany’s DAX has advanced past 12,000 pts for the first time this year as European stock markets have been boosted by the European Central Bank’s bond-buying programme. The Dow Jones in the US also hit a new record. (figures on left at 6pm BST).
Equities have benefited from a number of factors, including prolonged record low interest rates which have deterred investors from putting money into deposit accounts and bonds.
There have also been solid results from a number of companies during the March reporting season and even the banks have shown signs of recovery with Lloyds promising to return to the dividend list and challenger banks coming on to the market as the appetite increases for bank shares.
Today’s market was helped by TSB’s agreed deal with Sabadell which pushed its shares closer to the Spanish bank’s offer price.
There had been doubts that the FTSE100 would return to these levels after flirting with the 7,000 mark earlier this month then taking a dive on the back of renewed worries over Greece and the uncertainty surrounding the General Election in the UK.
But the emergence of a possible settlement between the eurozone members and the new government in Athens has helped calm nerves. At home, there was a broadly positive response to Chancellor George Osborne’s Budget which even the Shadow Chancellor Ed Balls seemed to endorse by saying it contained nothing he would reverse.
Few commentators were making a direct correlation between the FTSE100’s rise to new heights and the improving economy, given that most of its constituents are based overseas.
But its surge will be seen as a reflection of growing confidence.
Guy Foster, group head of research at Brewin Dolphin, said: “The FTSE 100 has finally breached the hurdle of 7,000 some fifteen years after it was first expected.
“The final ascent came as investors pushed back their forecasts for interest rate increases further. As we pass this latest milestone no doubt some will feel it marks a frothy top to the equity market rally but with inflation low and policy loose there is every indication that we are still at the mid-point in the current investment cycle.”
Chris Williams, CEO, Wealth Horizon said: “Today the FTSE 100 finally breached 7,000 having already set numerous record highs in 2015. While this is great news for investors in UK equities, it presents a conundrum for what comes next. Certainly, no one can say equities look like a bargain at these levels, so the key for investors is to diversify their exposure and make sure they are not taking too much risk on any one market.”