The FTSE 100 share index has hit a new high, passing through the previous record set on 30 December 1999. It closed at a new peak of 6,949.63. The previous record close was 6,930.2, set at the height of the dotcom boom. Earlier, the index also set a new intra-day high of 6,958.89, surpassing the previous figure of 6,950.6, also set on 30 December 1999.
Shares rose after eurozone finance ministers approved reform proposals submitted by Greece. The proposals were a condition for a four-month extension of Greece’s bailout. The agreement also had an impact on Greek stocks, with the benchmark Athex index ending the day 9.8% higher.
Stock markets around the world have been buoyed by economic stimulus programmes put in place by central banks after the global financial crisis that hit in 2008.
“Equity investors have been riding the wave of cheap money, fuelled by unconventional monetary policies pursued by the world’s central banks which have allowed this bull market to extend well beyond the duration of your average length of a bull market,” said Angus Campbell, senior analyst at online currency broker FxPro.
The FTSE 100’s rise has been slower than those of stock markets in the US and Germany.
“It is hardly impressive that, more than 15 years later, the FTSE 100 has finally breached its previous record close, said Samuel Tombs, said senior UK Economist at Capital Economics.
“Both the S&P 500 and Dax 30 exceeded their millennial year peaks in 2007 and they are now about 45% and 65% higher respectively,” he said.
Analysts say that low interest rates for savers have encouraged people to invest in the stock market.
“One of the big drivers for the FTSE right now is this expectation that if you hold on to equities [shares] you’re going to get an enormously greater yield than cash rates so lots of people are piling into equities,” said James Bevan, chief investment officer at investment firm CCLA Investment Management.
The FTSE 100 advanced for a record six straight years after it was launched in 1984. One of the rockiest periods in its history was during the financial crisis.
The FTSE 100 had its worst year on record in 2008, when the crisis wiped 31.3% of the index’s value. But on 24 November 2008 the index made its biggest one day gain of 9.8% when the US federal reserve stepped in to rescue Citigroup.
The FTSE 100’s biggest one-day fall occurred on 19 October 1987, so-called Black Monday, when ripples from Wall Street’s stock market crash prompted a 12.2% drop. As for the next move: “It looks as though the best gains have been made and further upside could be limited”, said Mr Campbell.
However, the FTSE 100 could fare favourably against its international peers. “We think that the outlook for the FTSE 100 is a bit brighter than for most other developed market equity indices,” said Mr Tombs