Share prices scale heights
SHARE prices hit record highs on both sides of the Atlantic yesterday on prospects for robust US economic growth and UK companies continuing to benefit from a weaker pound.
The FTSE 250, an index of mediumsized quoted companies seen as a more accurate barometer of Britain’s economy than the corporate elite, rose 0.2 per cent to a high of 18,827.2. It has rallied by about 25 per cent from the end of last June, when prices initially slumped after the Brexit vote.
Growth opportunities for export-led companies in the mid-cap index are opening up as their products become more competitive with sterling’s fall against the dollar.
This currency tailwind is set to be reinforced by a hike in US interest rates, signalled this week by Janet Yellen, pictured, the chairman of America’s Federal Reserve.
The FTSE 100 broke through the 7,300-point barrier to close just 35 points shy of last month’s record 7.337.8. The blue-chip index is littered with multinational companies that generate the bulk of their revenues in dollars.
America’s Dow Jones index continued to scale fresh heights above the 20,000point mark as analysts pointed to a raft of upbeat economic data ranging from consumer spending to manufacturing, which could receive a further boost from president Trump’s mooted tax reforms.
Neil Wilson, senior market analyst at ETX Capital, said: “Bang on cue, and no doubt with an eye to outshine Janet Yellen, Donald Trump offered a tantalising foretaste of planned tax reforms that sent the Dow soaring to new record highs. He was short on details but, based on what we’ve seen so far from this radical president, there is no reason to think that the tax plans will be anything less than a major shift in US fiscal policy.”
Analysts at Berenberg Capital Markets said: “US economic data on consumer spending, labour markets, consumer and business sentiment, and manufacturing production have been strong in early 2017, setting the stage for a major economic policy regime shift in 2017.
“The post-election surge in confidence and diminishing headwinds, including the powerful rally in equity markets, seems to be lifting economic activity that had stagnated for such a long time. These strong data make it exceedingly difficult for the Fed to explain its way out of a March rate hike.”