Britain’s FTSE 100 index has closed above 8,000 points for the very first time and notched a new all-time high despite the United Kingdom facing the weakest economic growth outlook among the world’s major economies.
The FTSE 100 closed at 8,012.53 on February 16, the highest level in its 39-year history.
The main British bourse has risen 7.5% so far in 2023, although it continues to trail the pan-European Stoxx 600 index that is up 10% year to date.
The United Kingdom’s headline inflation rate dipped for a third straight month in January to 10.1%, though it remains well above the Bank of England’s 2% target.
At the same time, European inflation also fell for a third consecutive month to 8.5% in January.
The easing of inflation, coupled with the fact that the U.K. and European economies have managed to avoid a recession has renewed investor confidence in stocks, say analysts.
The U.K. is also benefitting from a return to economic and political stability after the market turmoil seen last year in the wake of former Prime Minister Liz Truss’ poorly conceived economic plan and subsequent resignation, which came on the heels of Queen Elizabeth II dying.
Strong earnings in sectors with a heavy weighting in the FTSE 100, such as energy, commodities and financials, have also helped propel the index to record highs this year.
The index is largely comprised of multinational companies with high proportions of dollar-denominated earnings, and it provides comparatively high dividend payments to investors.
Prominent companies listed on the FTSE 100 include Rolls Royce (RR), Sainsbury (SBRY) and Vodafone (VOD). Since its inception in 1984, the FTSE 100 index has gained 630%.