Strong oil prices and the falling value of sterling pushed Britain’s main share index to its highest ever closing level on Thursday.
The FTSE 100 climbed 0.7% to close at 7,787.97 points, just short of its record intraday high of 7,792.56 points hit in mid-January.
The oil firms BP and Shell were among the strongest risers, along with firms that generate much of their income abroad, including Unilever and HSBC, and have benefited from the recent fall in the pound.
Sterling fell against the dollar and the euro to $1.35 and €1.144, respectively. Only a month ago the pound was eight cents higher against the dollar at $1.43.
However, some analysts warned against exuberance after the FTSE 100 tumbled in the spring to below 7,000 before rising again to its current record level.
Laith Khalaf, a senior analyst at the stockbroker Hargreaves Lansdown, said: “The death of the bull market has been greatly exaggerated, not for the first time in recent history. The FTSE did endure a shaky start to the year but after two months of steady climbing has now regained and surpassed its previous high.”
He said a stronger dollar, the rising cost of oil and the postponement of an interest-rate rise by the Bank of England last week can all claim credit for the recent strong showing from the stock market.
“There will come a time when the stock market will tumble again, at which point investors should take it in their stride and look beyond the immediate situation.”
Investors also appeared to be more relaxed about the outcome of Brexit negotiations after the prime minister indicated she had secured cabinet approval for a compromise over Britain’s future trading relationship with the European Union.
Theresa May said the UK would leave the customs union but with a fallback option, as yet lacking any detail, that would allay fears of a hard border with the Irish republic.
The move, which looks to effectively tie the UK to EU rules for several years after an interim period up to 2020, is expected to meet stiff opposition within the Tory party and could yet be scuppered in a final vote in the Commons.
FTSE 100 companies Royal Dutch Shell and BP were up 2.1% and 1.4% respectively as Brent crude broke the $80 a barrel barrier.
Gambling stocks initially came under pressure following the government’s decision to cut the top stake on betting terminals to £2.
However, they rallied later in the day higher as investors expressed relief that the regulatory uncertainty was over and focused instead on the potential opportunities in the US following a supreme court decision that allows states to set their own rules for sports gambling.
“Whilst £2 max stakes is a negative for the sector, if the implementation date is pushed back past 2020, online taxes come in later and the impact to EBITDA is less bad than feared, then there may be a sense of relief today,” Barclays analysts said.
The highest riser on the index of top 100 companies was Experian, the world’s biggest credit data company, which added 5.6% after its revenues for its full financial year grew more strongly than expected.
Royal Mail was one of the few to slump, tumbling 7.2% after it warned that the decline in letter volumes may come in at the higher end of its forecast range.
The mid-cap FTSE 250 index also hit a new record high, surpassing its previous mid-January record, up 0.9 per cent on the day.
The retail technology firm Ocado was the biggest gainer, up nearly 45% following news of a tie-up with the US retailer Kroger.
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