London's FTSE 100 Breaches Historic 10,000 Mark

The UK's leading share index, the FTSE 100, has surged past the 10,000-point mark for the very first time, hitting a significant milestone on the first trading day of the new year. While it briefly touched an all-time high of 10,046 points, the index later settled back, closing the day at 9951. This landmark moment is certainly welcome news for investors, particularly those with pensions or other savings tied to the stock market. However, it's important to remember that the FTSE 100, which tracks the performance of the 100 largest companies listed in London, isn't a direct barometer of the UK economy's health. A substantial three-quarters of these companies' revenues are generated from their extensive international operations. The index's climb follows a strong performance last year, where it ended more than 21% higher than the previous year. Surprisingly, London's benchmark even outpaced major American indexes during that period, despite widespread discussions about high stock valuations across the Atlantic. So, what's driving this impressive rally? A mix of global factors appears to be at play. Rising prices for precious metals like gold and silver boosted miners such as Rio Tinto. Increased global defence spending also lifted contractors like Babcock and Rolls-Royce, amidst ongoing economic uncertainty and geopolitical tensions. Experts suggest that London's market, with its diverse mix of industries including banking and mining, offers a sense of stability that appeals to investors seeking refuge during turbulent times. Independent financial commentators have highlighted the 10,000-point threshold as a "psychologically important milestone," signalling that London's blue-chip index is "back in favour" with investors. They note that compared to the "super-high valuation" of the US tech sector, the UK market presents a more appealing prospect. The Chancellor, Rachel Reeves, welcomed the breakthrough as "a vote of confidence in Britain's economy and a strong start to the new year." She has been a vocal advocate for increased investment in UK shares to stimulate economic growth, suggesting this achievement demonstrates the potential of buying into British companies. Globally, stock markets have seen a surge, partly fuelled by the widespread expectation that artificial intelligence (AI) will significantly boost company earnings. However, some experts caution that this enthusiasm could quickly fade if the high hopes for AI don't materialise, or if benefits aren't seen quickly enough, potentially leading to a sharp drop in share values. While the overall picture is positive, individual company fortunes varied. Retailer Next, for instance, raised its profit outlook multiple times last year, and luxury brand Burberry returned to profit. Conversely, bakery chain Greggs saw a notable 39% drop in its share price, with investors expressing concerns over its expansion plans and slower sales growth. Diageo and WH Smith also experienced significant falls. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.bbc.co.uk | Read original article