FTSE 100 powers through 7000 mark for first time in more than a year as optimism rises about a global economic recovery
- The last time the blue-chip index was above that milestone was in late February 2020
- A month later it had fallen below the 5000 mark after weeks of panic selling
- The turnaround has been driven by the vaccine rollout which continues at pace
The FTSE 100 has powered through the 7000 mark for the first time in more than a year as optimism rises about a global economic recovery.
The last time the blue-chip index was above that milestone was in late February 2020 as investors were gauging the full magnitude of the coronavirus pandemic.
A month later it had fallen below the 5000 mark after weeks of panic selling.
But yesterday it finished up 0.5 per cent, or 36.03 points, at 7019.53 while The FTSE 250 rose to a record high as it gained 0.2 per cent, or 50.14 points, to 22,522.18.
The turnaround has been driven by the vaccine rollout which continues at pace.
As a result there is increasingly positive talk about the future state of the economy.
Investors are once again seeing opportunity rather than threat in UK shares.
Russ Mould, director at AJ Bell, said: ‘This represents a massive milestone in recovering from the terrible pandemic and shows how investors’ confidence has completely changed since just over a year ago.
‘The market was understandably shocked as coronavirus gripped the world but in true investor style it has quickly focused on the future and the ability for corporate earnings to recover.’
Major gains were made by miners that were boosted by strong economic data from China and rising oil prices. Brent Crude has risen 7 per cent this week to $67 per barrel. Rio Tinto added 1.2 per cent, or 70p, at 6054p and Anglo American climbed 1.6 per cent, or 50p, to 3199p. The re-opening of bars, restaurants and retailers this week has been a boost and Wetherspoons was up 1.1 per cent, or 15p, at 1384p and Restaurant Group gained 1 per cent, or 1.2p, to 123p. British Airways owner IAG was also in positive territory as UK holidaymakers hope they can be given the green light to go away this summer. IAG was up 0.6 per cent, or 1.3p, at 208p.
Although having broken the psychologically important 7000 barrier, the FTSE 100 remains more than 500 points below its level at the start of last year and has lagged behind several other major markets. The Footsie’s record high was close to 7900 in 2018. Analysts said London’s problem during the pandemic has been not enough big technology companies that have ridden the wave of an investment boom in New York.
Steve Clayton, fund manager at Hargreaves Lansdown, said ‘The UK market has much bigger exposure to commodities and banking than Wall Street or Frankfurt, so the performance of those sectors will be key to the UK’s relative performance in the years ahead.’
Markets around the globe were also on the charge and in Paris the Cac 40 rose 52.94 points at 6287.07 and the Dax in Germany gained 204.42 at 15,459.75.
In the US there were fresh record highs as the S&P and Dow Jones continued to climb.
Koichi Fujishiro, economist at Japanese insurer Dai-ichi Life, said ‘The US recovery looks really strong. And now that restaurants and hotels, both of which are labour intensive, are reopening, we could see sharp gains in payrolls in coming month.’
CHINA SPRINGS BACK TO LIFE
China’s economy grew at the fastest pace on record at the start of the year as it continued its recovery from the pandemic.
Official figures showed output jumped 18.3 per cent year-on-year in the first quarter of 2021 – the strongest performance since records began in 1992. The world’s second largest economy has bounced back from the economic shock caused by Covid.
The figures were skewed after a plunge in economic activity in the same period last year when the country went into lockdown.