Share Prices & Company Research

Press Release

04 October 2016

FTSE reaches new highs – but an uncomfortable view from the summit?

A 31-year low for the Pound helped push FTSE indices close to record highs today after the Government set out its timeline for leaving the EU.

After breaching 7000 this morning (Tuesday 4th October 2016), the FTSE 100 continued to rise to as high as 7121.93, just below its April 2015 intraday record of 7122.74. Meanwhile, the FTSE 250 reached a new all-time high of above 18,600 during the day.

James Andrews, Head of Investment Management at investment management and stockbroking firm Redmayne-Bentley, said: “The FTSE 100 reached towards a record high today as the Pound fell further against the US Dollar to reach a 31-year low (GBP USD: 1.27), as the consensus trade of buying the large Dollar earners gained further impetus.

“This further equity market rally comes in the face of seemingly negative news elsewhere for the UK economy, as gross foreign investment into the UK over July and August was less than a third of the monthly average over the same period. This was in addition to news that the IMF has cut the UK growth forecast for 2017 for the second time since the ‘Brexit’ vote, predicting growth to fall to 1.1 per cent. In contrast, it revised up this year’s forecast to 1.8 per cent as numbers have remained robust so far in 2016.

“The heady heights we see in the UK equity markets currently reflect the lack of returns to be found in less risky assets, such as cash and bonds. The FTSE 100 is no longer a gauge of the UK economy, given it is full of large multi-national companies, but the more domestic-focussed FTSE 250 is also touching all-time highs.

“The likely fallout of messy negotiations around the exit from the EU mean it is an uncomfortable view from the summit currently, and it’s a long way down if the future turns out to be less than rosy.”

Please note, investments and income arising from them can fall as well as rise in value and you may get back less than you originally invested. Past performance and forecasts are not a reliable indicator of future results or performance.

FTSE reaches new highs – but an uncomfortable view from the summit?
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