FTSE 100 ends week on record high

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London’s stock market brushed off electoral concerns to hit a new high as European shares also surged to a 15-year record on hopes that weaker currencies would support corporate profits.

The FTSE 100 index of leading UK shares closed up 1.1% at 7,090 points and also hit a new intra-day high of 7,095.

The index continued its run despite jitters about the result of next month’s general election that made the pound touch a five-year low against the dollar.

The FTSE 100 is up about 8% since the start of 2015 despite the growing likelihood of a second successive parliament with no party securing an overall majority.

Britain’s biggest companies make most of their profits overseas, meaning that sterling’s fall against the dollar could boost export earnings. Rolls-Royce and Imperial Tobacco, which were hit by the strength of the pound last year, were both among the top risers.

The biggest gainer in the FTSE 100 was the drugs company Shire, whose shares rose 5% after the US watchdog fast-tracked an eye disease treatment.

Housebuilders also rose on news this week of further house price growth. Barratt Developments and Taylor Wimpey shares were both up more than 3%.

The FTSEurofirst 300 index of top European shares closed 0.9% higher at 1,645 points, powering past its 2007 peak and taking gains so far this year to 20%.

Traders bet that further declines in the already weak euro would support economic recovery and buoy company profits. Germany’s DAX index hit a record and France’s CAC 40 rose to its highest level since 2008.

News this week that Greece had repaid a €450m (£325m) loan instalment to the IMF also lifted the market.

European shares have risen this year as global investors increased their interest in the region on expectations that the euro’s slide would give companies an export lift.

About half of eurozone corporate earnings come from outside the region and the euro’s 16% fall against a basket of currencies this year means profits earned overseas will be worth more when converted back into euros.

The FTSE 100 broke through the record set during the peak of the dotcom boom in February. The record of 6,950 had stood since the final trading day of 1999.

The index broke through the 7,000 barrier for the first time last month, although it is still below the 1999 peak once inflation is taken into account. Markets have been supported for months by central banks keeping interest rates low.

The European Central Bank joined the UK and the US last month in pumping money into the financial system through quantitative easing, by acquiring sovereign debt from financial institutions which in turn reduced the value of the euro.

US shares also rose on Friday, led by GE’s announcement that it would offload most of its risky GE Capital business and buy back shares.

In afternoon trading the S&P 500 index was up 1.6% for the week and on track for a second week of gains, supported by an increase in merger activity. Japan’s Nikkei index rose above 20,000 points for the first time in 15 years.

Powered by Guardian.co.ukThis article was written by Sean Farrell, for theguardian.com on Friday 10th April 2015 18.48 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010

 

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