Another all-time high for Footsie

Markets soar despite slump in sterling to five-year low

SHARES in London hit a record high last night as stock markets around the world soared. The FTSE 100 index closed 74.41 points or 1pc higher at 7089.77 – topping the previous all-time high of 7065.08 reached last month.

The rally in London, which came despite a dramatic slump in the pound, was echoed across Europe, with Frankfurt up an even more impressive 1.7pc.

Analysts said shares around the world have been buoyed by money printing by the European Central Bank and signs that the global economy is slowly picking up.

There was also relief that Greece managed to repay the £333m it owed to the International Monetary Fund this week – keeping its hopes of more aid alive.

But at the same time, the pound hit a five-year low against the dollar amid worries over the outcome of the election and concerns that the economic recovery is slowing.

Veteran City commentator David Buik, an analyst at stock broker Panmure Gordon, said: ‘It was a mixed day for the UK with the pound at a five-year low and the Footsie at a record high.

‘Sterling has been hit by worries about the economy, pre- election jitters and the prospect of a hung parliament. But shares are on the up as low interest rates tempt investors looking for better returns into the stock market.’ He said the fall in sterling helped push share prices higher because many Footsie companies derive their revenues from overseas.

A weak pound will inflate earnings when they are converted back into sterling.

The global stock market rally started in Asia, where Japan’s Nikkei rose above 20,000 for the first time in 15 years before retreating. Investors in Europe picked up the baton with Germany’s DAX also recording a new high while there were gains in France and Italy.

On Wall Street, the Dow Jones Industrial Average was up 90 points in early trading and the S&P 500 tested record highs.

Tony Cross, a market analyst at the online trading firm Trustnet Direct, said that with global stock markets on the move the outlook for the Footsie was good. ‘It’s easy to see why the blue chip index is just a whisker away from 7100,’ he said. ‘It’s worth bearing in mind that sentiment is still being depressed by the uncertainty of what next month’s General Election will hold, so arguably once this is clear it could realistically find itself charging higher again.’

But election jitters are taking their toll on the pound amid signs that the economy is slowing.

Sterling fell to a five-year low below $1.46 before clawing back some of its losses.

The National Institute of Economic and Social Research said the economy grew by 0.6pc in the first quarter of the year – matching the final quarter of 2014.

But disappointing figures from the Office for National Statistics showed that manufacturing output rose by just 0.4pc in February while total industrial production increased by a weaker- thanexpected 0.1pc. Construction output fell 0.9pc.

Analysts said this put the ONS on course to report weaker growth in the first quarter of the year when it publishes figures on April 28 – just a week before polling day.

Alan Clarke, head of European fixed-income strategy at Scotiabank, said: ‘Unless we get big revisions to these data, or a massive jump in services output in February and March, then GDP growth of just 0.4pc is looking the most likely outcome.’