London’s FTSE 100 posted a new intraday record on Tuesday amid a global stock market rally driven by renewed optimism on interest rate cuts from major central banks.
The blue-chip index briefly broke the 8,300-point barrier for the first time ever early on Tuesday. It reached 8,311.02 before dropping just shy of the milestone later in the morning.
The FTSE 100 could set its eighth-record closing price of the year if it holds onto these gains. The index has closed higher in 10 of its last 13 sessions.
The index has risen 7.43 per cent in 2024, bouncing back from a sluggish 2023 marked by interest rate hikes and economic uncertainty.
There were only 11 fallers on the index during the early afternoon, the worst being medical equipment specialist Smith & Nephew dropping one per cent.
The biggest risers on Tuesday were Irish distribution giant DCC, up 4.5 per cent, housebuilder Persimmon, up 3.4 per cent, and online grocer Ocado, up three per cent. Rate-sensitive housebuilding stocks were buoyed this morning by data from Halifax, which showed that house prices returned to growth in April.
Oil and gas giant Shell, the second-biggest stock on the FTSE 100, rose 1.6 per cent following reports that it is in talks to sell its gas station business in Malaysia to Saudi Aramco.
Meanwhile, the mid-cap FTSE 250, more closely aligned with the health of the UK economy, has been trading at its highest level since last February. The index is up 1.17 per cent at 20,401.18.
New figures out this week are set to show that last year’s shallow recession has come to an end as political debate about the state of the economy heats up.
Economists expect figures released on Friday to show that the UK grew 0.1 per cent in March, meaning it will have notched a 0.4 per cent expansion over the first quarter of the year.
The FTSE 100’s jump followed similar rallies on Wall Street and in Asia. The S&P 500 closed one per cent higher on Monday, while the Nikkei 225 jumped 1.6 per cent.
European stocks have also rallied, with the blue-chip Stoxx 50 up 0.5 per cent. Germany’s Dax has also gained 0.5 per cent, while Madrid’s Ibex 35 is up 0.8 per cent.
Global markets received a fresh bout of rate-cut optimism on Friday after new data from across the pond signalled a cooling in the world’s largest economy. The US economy added 175,000 jobs in April, far below economists’ expectations of 243,000.
Traders have since strengthened their bets on a September rate cut from the US Federal Reserve. The Bank of England, which will meet on Thursday, is expected to cut rates by 25 basis points in August and once more before the end of the year.
New data on Tuesday also showed British consumer spending softened last month, putting more pressure on rate-setters to lower borrowing costs as their previous interest rate hikes take a toll.
“Investors now have to decide whether the UK is cheap because it (still) deserves to be cheap, or whether the times really are changing, because if they are then further welcome gains could be on the cards,” said Russ Mould, investment director at AJ Bell.
“The picture does not look quite so rosy in US dollars and while this can be used as a pretext to cavil, it can also be a further explanation of why the index is gaining fresh traction – it may still look cheap, especially to overseas buyers.”