Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The FTSE 100 index closed at a record high on Thursday, completing its recovery from a sharp decline earlier in the year sparked by US President Donald Trump’s global trade war.
The UK’s main equity benchmark rose 0.2 per cent to 8884.92, helped by gains on Wall Street following soft US inflation data and topping its previous closing record of 8871.31 set on March 3.
The index was caught up in a global stock market rout in early April after Trump’s “liberation day” tariff announcements, but has clawed its way back as the US president retreated from many of his most aggressive levies.
The London market has been helped by investors cooling on US stocks, which are yet to return to their own record high because of Trump’s trade war and fears of a ballooning US deficit, analysts say.
“Investors have been allocating away from the US, and so Europe and the UK have benefited from that,” said Charles Hall, head of research at UK investment bank Peel Hunt.
“We’ve got an improving economy, and we’re seen as having a more stable political situation than a lot of other companies,” he added. Trade agreements with the US, EU and India in recent weeks had also been “helpful in terms of sentiment”, added Hall.
“After 10 years when the UK was seen as a country that was difficult to do deals with, we are now back in as a partner country of choice,” he said.
Amid early signs that sentiment is cooling on US equities after years of inflows, other markets are starting to feel the benefit as investors hunt for cheaper alternatives. The FTSE 100 is on a price/earnings ratio of 16.7 times, compared with the S&P 500’s 26.3 times.
“The UK market has a lot going for it,” said Trevor Greetham, multi asset portfolio manager at Royal London Asset Management, pointing to its lower valuations and adding that the market was more diversified and inflation resilient than some of its peers.
The FTSE 100 has risen 8.7 per cent this year so far, despite falling sharply along with its global peers after Trump’s “liberation day” tariffs, and is close to its record intraday high, hit in early March. Wall Street’s S&P 500 index is 2.5 per cent higher so far this year.
Emmanuel Cau, head of European equities strategy at Barclays, said that the make-up of the FTSE 100 has supported its growth this year, adding that “we are seeing a bit of momentum unwind” and “a rotation back into laggards supports the UK”.
