The FTSE 100 index of leading London-listed shares closed at a record 8,023 points on Monday, up 128 points or 1.6%, surpassing its previous closing high of 8,014 points set in February 2023. The index remains slightly below its all-time intraday peak of 8,047.06.
The rally was driven by growing expectations that the Bank of England will cut interest rates twice this year, reducing the base rate from a 16-year high of 5.25% to 4.75% by December. Markets now anticipate the first cut in August rather than September, after deputy governor Sir Dave Ramsden suggested inflation could fall faster than expected.
The pound weakened to $1.23 against the US dollar, its lowest since November, boosting the value of overseas earnings for multinational companies listed on the FTSE 100. Easing geopolitical tensions in the Middle East, after a weekend without further attacks between Iran and Israel, also lifted investor sentiment.
Russ Mould, investment director at AJ Bell, said the FTSE 100 bounced back strongly on relief that Middle East tensions appeared contained. Travel and retail stocks gained, while precious metals miner Fresnillo fell as gold and silver prices dipped on reduced safe-haven demand.
Susannah Streeter of Hargreaves Lansdown noted the index had “a spring in its step,” citing brighter UK economic prospects and anticipated rate cuts. The FTSE 100 has gained almost 4% in 2024, lagging behind France’s Cac and Germany’s Dax, which have risen 6.5%.
