FTSE 100 Breaks Record 8,000 Points Barrier

• FTSE 100 breaks past 8,000 points amid renewed optimism
• Record-breaking highs on the back of UK inflation reading

FTSE 100 Jumps 6%

The FTSE 100 has jumped 6% so far this year and has broken past the unprecedented 8,000 points mark for the first time. The over-arching reason for the increase comes from renewed optimism that inflation has peaked, which paves the way for central banks to introduce some slack when it comes to monetary tightening.

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2022 hedge fund letters, conferences and more

The UK’s inflation reading has been an important milestone given wider concerns about the country’s particularly harsh report card from the IMF recently. Among the biggest risers today are housebuilder Persimmon and Premier Inn owner Whitbread – both stand to benefit in a big way from a softer economic landing.

The recent momentum has been astounding in its speed, and highlights that the outlook for UK plc has turned a corner. Fundamentally though, sentiment could shift quickly depending on the outcome of central bank decisions. The likely outlook for now shows a relatively clear path back to more normal fiscal environments, but as the last few years have shown, destabilising obstacles can appear with very little notice.

With new market records being reached, it’s not so much an issue of what goes up must come all the way down, as it is understanding that dizzying new heights inevitably result in trips and falls eventually.

The UK market remains fundamentally unloved, with a forward price to earnings ratio hovering around the 10.8 mark in recent times. That highlights the ongoing challenges, including the idea that we potentially face higher-for-longer inflation because of stubbornly high food prices.

At the same time, listed UK companies are very reliant on international revenues, which means the health of our own economy holds less importance than you might think. The recent spark of enthusiasm has almost certainly been expanded by optimism about China’s reopening and the EU’s recovery.

Article by Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown