FTSE 100 notches up record close above 8,000

The FTSE 100 closed above 8,000 for the first time today amid optimism that inflation has been curbed, and few if any more interest rate hikes are needed.

London’s blue chip index finished up 14.70 points at 8012.53, after hitting a fresh trading high of 8,047.06 this morning. The FTSE 250, made up of more UK-oriented stocks, rose 8.86 to 20181.45.

Profit downgrades from corporates and a potential recession are thought to be already priced in, while the slowdown in the inflation rate to 10.1 per cent in January has spurred hopes that the Bank of England will soon end its rate hiking cycle.

End in sight? A slowdown in the inflation rate to 10.1% has spurred hopes that the Bank of England will soon end rate hikes

‘The dominant theme now seems to be that “better times are coming”,’ says AJ Bell investment director Russ Mould.

‘Analysts have already slashed earnings estimates and share prices have fallen sharply already, so it is easier to argue that a lot of bad news and the threat of a recession is already priced in.

‘Lower oil prices, a mild winter and energy subsidies/price caps are helping take some of the pressure off consumers, while wages are still rising.’

Mould added that there are hopes the rate of inflation has peaked, helped by lower oil and gas prices, and will continue to decelerate.

‘This will in turn give the Bank of England chance to halt its cycle of interest rate increases and pivot to rate cuts.’

Commenting on the FTSE 100 breaching 8,000 for the first time, Charles Stanley’s chief investment analyst Rob Morgan said: ‘Over the past two decades, the UK’s FTSE 100 index has been a poor performer compared with most other markets.

‘The index, representing the 100 largest stock market-listed UK companies, is a mere 25 per cent higher than at the turn of the millennium.

‘Where the FTSE has stood out, and consequently generated respectable returns, is dividends – the profits declared by companies and paid to shareholders.

‘Reinvesting these for growth has boosted returns substantially, and the old fashioned values of seeking out sustainable and growing payouts from shares are a large part of why the index has hit the landmark of 8,000 points.’