For the first time in its history, the FTSE 100 Index climbed above 8,000 points within a day, reports an article in Bloomberg. Many of the heavyweights in the index such as Shell Plc and British American Tobacco Plc fueled the rise, as did a dip in the pound sterling. The index rose 0.6% higher to the intraday high of 8,003.7 points.
The FTSE dodged last year’s selloff, as well as outperformed the MSCI World Index for the first time in 10 years. It’s started off 2023 with continuous gains as equities around the globe have rallied and in the wake of a weakened sterling, which generally benefits the index. The FTSE has “held firm over the last year despite market volatility,” Mike Horan, head of EMEA trading at BNY Mellon Pershing, told Bloomberg. However, it would be a mistake to view this recent high as an indication that the market is “truly healthy,” he added.
The index is heavily weighted in commodity stocks, such as BP, AstraZeneca, and Unilever, which no doubt drove its advancements over the last 12 months. Investors in UK large caps have been reaping the rewards of strong dividend payouts, among the highest globally. But persistently high inflation in the UK, a possible rebound for the pound sterling, and a slowing rally in commodities could start to impact the index, which in spite of its gains is still underperforming its global peers so far this year. Indeed, the FTSE 100’s recent high shouldn’t be considered “any endorsement to the view that the economic outlook in the UK is improving at all at this time,” Mark Dowding, the CIO of BlueBay Asset Management, told Bloomberg.