FTSE hits new high as blue-chip shares surge

Shares in UK’S biggest companies surge as they benefit from the pound slumping against the dollar

The FTSE 100 has surged to an all-time high amid growing signs that the pace of interest rate rises by central banks has peaked. Britain’s blue-chip index added 1.1 per cent to hit a new intraday high of 7,905.52 yesterday, beating the previous record set in May 2018. It also closed at an all-time high of 7902. Shares in the UK’S biggest companies surged after the pound slumped against a strong dollar following official figures showing a strong improvement in the US jobs market.

‘Despite indicators of recession, the economy is clearly not as close to recession as we had suspected’

‘If we were to enter a global recession, then the defensive nature of FTSE 100 will remain attractive’

THE FTSE 100 has surged to an all-time high amid growing signs that the pace of interest rate rises by central banks has reached a peak.

Britain’s blue-chip index added as much as 1.1pc to hit a new intraday high of 7,905.52 yesterday, outstripping its previous record last reached in May 2018. It also managed to close at an allso time high of 7,902, eclipsing the previous peak on the same day in 2018.

Shares in the UK’S biggest companies surged after the pound slumped as much as 1.3pc against a strong dollar.

The US currency rallied following the publication of official payroll figures showing that hundreds of thousands more jobs than expected were added to the world’s biggest economy in January.

Andrew Hunter, senior US economist at Capital Economics, said: “Despite most indicators of recession flashing red, the economy is clearly not as close to recession as we had suspected.”

The FTSE 100 is dominated by companies such as HSBC and Shell, which earn most of their sales from the UK and benefit from a weaker pound. Janet Mui, head of market analysis at RBC Brewin Dolphin, said: “If we were to enter a global recession, then the defensive nature of FTSE 100 will remain attractive. Energy and material sectors may also benefit if China sees a successful reopening.”

Global markets have been buoyant in recent weeks owing to optimism that central banks will halt recent interest rate increases and a slowdown in inflation across key global economies.

It came as the Bank of England’s chief economist Huw Pill signalled that interest rates are nearing their peak, a day after policymakers increased rates for the tenth consecutive time to 4pc. He said that the full impact of successive rate rises since December 2021 has not yet been felt and their effects are “already in the pipeline”.

“That amounts to quite a substantial tightening of monetary policy and that is still working through the system.”

However, Mr Pill added that the Bank’s mandate was not just to lower inflation but to bring it down from 10.5pc to its 2pc target. “We still have quite a long way to go and we need to see the job through,” he said.

In the US, total nonfarm payroll employment rose by 517,000 in January, more than double the consensus prediction of 180,000. But Mr Hunter warned that the stronger-thanexpected jobs figures would not necessarily embolden the Federal Reserve to bring an end to interest rate hikes.

Jerome Powell, the Fed chairman, earlier said it had “more work to do” to bring inflation back to 2pc as the central bank raised the US interest rate by 0.25 percentage points to 4.75pc.

Separate data yesterday showed the UK’S services sector has suffered its worst month in two years as rail strikes hammered pubs and restaurants.

The headline seasonally-adjusted S&P Global/cips UK services PMI fell for the fourth month in a row in January, to 48.7, from 49.9. This brought the composite PMI down from 49.0 in December to 48.5 in January.