Britain’s benchmark equity index rose yesterday to its best closing level since late 2000, helped by rising bank stocks, and analysts said there was little holding it back from its all-time highs.
Interest rate cuts and injections of liquidity by central banks have hit returns on bonds, driving investors to seek the better returns on offer from equities, spurring a global stock market rally over the last year.
The blue-chip FTSE 100 index closed up by 0.5 per cent, or 32.57 points, at 6,755.63 points – its highest closing level since September 2000.
Germany’s DAX and the US Dow Jones Industrial Average have already hit record highs this year, and IG analyst Brenda Kelly said the next target for the FTSE 100 could be its record intraday peak of 6,950.60 points in December 1999.
Securequity sales trader Jawaid Afsar also said there was little to hold back the FTSE.
“It’s grinding higher, and there’s no real selling pressure. Everyone keeps trying to call the top of the market but any wobble is another occasion to buy into it.
“The momentum is still bullish,” said Afsar.
Part-nationalised lender Royal Bank of Scotland led the FTSE leaderboard with a 4.5 per cent gain, which traders attributed to an upgrade on the stock by broker Numis.
RBS’s rise enabled the UK banking sector to advance 0.9 per cent, which gave one of the biggest lifts to the FTSE 100 which has risen 14.5 per cent since the start of 2013.
EGR Broking managing director Kyri Kangellaris said some investors may look to sell equities in order to book profits on the rally so far this year at the 6,850 point mark – a level at which the FTSE hit a high in 1999 before then falling sharply as the Internet bubble burst at the start of 2000.
“I still think people should look to take profits,” he said.
Meanwhile, Global equity markets resumed this year’s rally yesterday, driven higher by a flurry of merger and acquisition activity, while a recent tumble in the yen against the dollar halted after Japan’s economy minister suggested the currency might have weakened enough.
Despite major American and European stock indices being up double digits – the US benchmark S&P 500 index is almost 17 per cent higher so far this year – investors still see better returns ahead in equities than elsewhere.
Deals such as Yahoo’s $1.1 billion bid for Tumblr indicate that companies continue to search for growth through acquisitions despite record high share prices, a bullish sign for stocks. Yahoo was up 1.21 per cent at $26.84.
The Dow Jones industrial average was up 16.48 points, or 0.11 per cent, at 15,370.88. The Standard & Poor’s 500 Index was up 2.64 points, or 0.16 per cent, at 1,670.11. The Nasdaq Composite Index was up 2.01 points, or 0.06 per cent, at 3,500.97. MSCI’s all-country world equity index rose 0.51 per cent to its highest since June 2008.