The FTSE 100 went over 7,000 on Friday for the first time since February 2020. Business Leader spoke to some industry experts on the significance of the milestone.
This is the first time it has hit the 7,000 mark since the early days of the coronavirus crisis in the UK. It is now more than 35% higher than its low point in March 2020.
London’s leading share index rose as industrial, banking and mining stocks made gains on growing optimism about the state of the economy – with a light now at the end of the tunnel for the current restrictions in place.
Steve Clayton, Hargreaves Lansdown Select Fund Manager
The UK market has been something of a laggard, compared to international markets on both sides of the Atlantic. But today the FTSE100 has passed a big milestone, rising through 7,000 for the first time since the pandemic sent it tumbling a year ago. Investor confidence in economic recovery is rising as Governments roll out stimulus packages and business confidence surveys are hitting highs.
Whether the FTSE can close the gap against US and European market indexes is another matter. 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. For now though, sentiment is on the up and the FTSE100 is having its day in the sunshine.
Banks are among the top performers today with four of the high streets biggest banks appearing in the top 12 biggest risers, with each up by more than 2%. This is demonstrating increased confidence in the UK recovery after the successful roll out of the vaccines.
Russ Mould, investment director at AJ Bell
The FTSE 100 jumped through the 7,000 level for the first time since February 2020, rising 0.4% to 7,013.
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 the coronavirus gripped the world but in true investor style it has quickly focused on the future and the ability for corporate earnings to recover.
FTSE 100 miners and oil producers were in demand on Friday following new data that showed China’s economy jumped by 18.3% in the first quarter of 2021, led by strong industrial output. Household consumption is expected to improve as the year progresses.
The key issue from the market’s perspective is how quickly stimulus measures will be withdrawn in the country. Officials say it will be a gradual process but not everyone trusts China’s authorities to be true to their word.
The FTSE 250 is also on a roll, having risen by 26% in value over the past six months. This has silenced critics who said there is little to like about the UK stock market.
Value-style stocks offering jam today rather than jam tomorrow have been in demand, as well as lots of companies well placed to benefit from the reopening of the economy thanks to the rollout of the Covid vaccines.
Friday’s session was dominated by industrials, financials and utilities leading the way, helping to push the FTSE 250 up another 0.3% to 22,539. Key movers included Mitie, whose shares have more than doubled in price in the past six months.
Mitie was previously seen as a pandemic loser. Many people thought the working from home trend could result in reduced commercial property demand, affecting one of its key services in cleaning offices. Investors now appear to be taking the view that this threat has been overplayed.
‘Global markets near record peaks and will get stronger’
As the FTSE 100 hits 7,000 points for the first time since the Covid pandemic, global stock markets are poised to ‘get even stronger’, says the CEO of one of the world’s largest independent financial advisory and fintech organisations.
The observation from Nigel Green, the chief executive and founder of deVere Group, comes as London’s index jumped over the important threshold in early trading in London, gaining over 0.5% to 7024 points. He shared his thoughts with Business Leader.
London’s blue-chip index is up 40% since the worst lows of the pandemic. This landmark moment represents the wider optimistic sentiment gripping global markets which are near record peaks. We can expect global stock markets to get even stronger as investors look to seize the opportunities from economies reopening.
They are looking towards economies rebounding in a post-pandemic era due to the monetary and fiscal stimulus, pent-up cash and demand, and strong corporate earnings. The current ultra-low interest rate environment and the under-performance of bonds will also act as a catalyst for stock markets.
However, the CEO’s bullish comments also come with a warning.
I would urge investors to proceed with caution as there are some headwinds on the horizon, including relations between the U.S. and China, the world’s two largest economies, which could be coming to a tipping point in coming weeks.
As such, in order to capitalise on the opportunities and mitigate risks, investors must ensure proper portfolio diversification.
A variety of factors are going to drive global stock markets. Investors will not want to miss out and should work with a good fund manager to judiciously top-up their portfolios.