The FTSE 100 Hits Another Record High – Upbeat Earnings Lift Sentiment
The FTSE 100 Hits Another Record High – Upbeat Earnings Lift Sentiment
The UK’s benchmark index hit an intraday record on Friday as it rose above 7,800 for the first time in more than three years. The FTSE 100 – the largest blue-chip – was boosted by upbeat earnings from companies in the mining, oil and gas and utilities sectors.
“The FTSE 100 has clearly got its mojo back after a period of wobbly momentum,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. She said the FTSE 100 had been “defying the doom and gloom” in the global economy and was particularly attractive given its weighting towards globally-focused commodities, utilities, financials and consumer giants.
Stocks were boosted by a number of upbeat earnings reports from companies including BP, which reported a record profit for the second quarter and lifted its dividend by four per cent. Shares in Standard Chartered, which announced reduced credit losses, also added to the rally.
Several other blue-chips, including Barclays Group, Rio Tinto and Standard Life, also reported record profits for the second quarter, with Rio Tinto reporting a net profit of $2.4 billion. The company also said its debt profile had improved compared to the end of 2018.
Some of the biggest gains on the index came from banking stocks, with HSBC and Prudential jumping 4.6% and 2.4%, respectively. These shares are up despite the Bank of England easing its guidance for further interest rate hikes as it expects inflation to peak in 2020 and then fall again in the coming years.
Other FTSE 100 gains were led by energy producers, which saw shares in BP and Shell climb 5% after the US reported strong employment numbers and oil prices rallied on the news. The energy sector was also helped by the news that US crude oil stockpiles were at a seven-year low in January, according to data from Automated Data Processing.
The FTSE 100’s biggest risers were also among the best performers in the market, with the likes of 3i Group and GlaxoSmithKline climbing to new record levels as investors cheered news that these companies beat their profit targets for the first half of the year.
A trading update from beverage maker AG Barr, which said that its sales have risen above pre-Covid-19 levels, was also positive for investors. Diageo, which reported a net loss for the full year, lost 5.5 per cent.
In other sector news, Fresnillo gained nearly 7% after it confirmed that its sales had risen by a higher rate than expected in the past quarter. The company said it had started to sell its Fresnillo brand on supermarket shelves, following a deal with J Sainsbury.
ii’s Richard Hunter noted that while the FTSE 100 had been lifted by recent strong results, it was worth bearing in mind that some of the strength may soon begin to fade following disappointing updates from US tech giants. He added that while the tech sector had been a key driver of the FTSE 100’s recent performance, it was now time to turn more attention to the underlying businesses and how the wider UK economy is faring.