London’s leading share index broke through 9,000 this morning for the first time as investors reacted to Britain’s favourable treatment from US tariffs.
The FTSE 100 opened at 9,002.31 but fell back to close 59.74 points lower at 8,938.32.
The US-UK trade deal means the UK is unaffected by higher tariffs of up to 30% imposed on the European Union.
Dan Coatsworth, investment analyst at AJ Bell, said: “It’s party time as the FTSE 100 has smashed through the 9,000 level.
“This is another big tick in what’s proving to be a momentous year for the UK stock market. It took eight years for the FTSE 100 to go from 7,000 to 8,000, yet only two years to break through 9,000. That suggests the market is shaking off its unloved reputation and more investors like what’s on the menu.
“Outperforming the main US indices since January is a major achievement for the UK and the FTSE 100 going through 9,000 builds on this success. It should help to convince overseas investors that the UK market isn’t dull and boring.”
The new record coincides with an announcement from the financial regulator on various initiatives to potentially give the UK market another boost.
The IPO process will be sped up in an effort to convince more companies to list in London. Existing quoted companies won’t have to publish detailed documents to raise more money, in most cases. The process of issuing corporate bonds to retail investors will also be simplified.
John Moore, wealth manager at RBC Brewin Dolphin, said: “The FTSE 100 has been driven to the 9,000-point milestone by several factors.
“Firstly, while the index’s composition had been a brake on its progress compared to other markets, now it is providing a tailwind, with strong earnings momentum in the banking and defence sectors, in particular, supported by the likes of some of the larger operators in other industries such as Next, Tesco, and National Grid.
“Currency has also played a role, though its impact is likely to fluctuate over time.
“The UK offers relative political stability compared to other parts of the world at present. While there may be tax increases to come, which was part of the reason for the sell-off of the pound in early June, the government has a clear mandate and tenure for the next few years.
“That compares favourably to other parts of Europe, even, where coalition governments are having a tough time.”
Chris Beauchamp, chief market analyst at IG said: “The global nature of the market rally means that even the FTSE 100 has been able to lay claim to a new milestone, moving above 9000 for the first time.
“Its percentage gain over the last three months actually pips that of the Dow, but it continues to lag far behind the likes of the Nasdaq 100, whose alluring growth stocks are firmly back in vogue.”
Shares in Tokyo rose overnight as the focus turned to US inflation data and quarterly results from America’s biggest banks. Tokyo’s Nikkei 255 was up 0.24%, but China’s SSE Composite fell 0.8% as strong second-quarter GDP growth slowed.
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