London’s benchmark index is a step closer to reaching a new record
The FTSE 100 is within touching distance of a record high after rising to its best level in 14 years.
London’s index of leading shares finished up 27.8 points, or 0.4pc, at 6,865.86, taking the blue-chips to their highest close since December 30, 1999 when the FTSE 100 finished at a record 6,930.2 at the height of the dotcom bubble.
Monday’s close was the second-highest ever recorded by the index and leaves the FTSE well-positioned to push on to a fresh peak.
Distribution group Bunzl (LSE: BNZL.L – news) led the blue-chips higher on the day after its shares were lifted 6.9pc by better-than-expected full-year results.
Vodafone, up 4.1pc, was also a strong riser following yesterday’s share consolidation that followed its $ 130bn deal to exit its US joint venture. The flood of cash that is being returned to Vodafone investors is expected to be reinvested in the stock market next week, which is likely to push the FTSE even higher.
Many stock market analysts predicted last year that 2014 would see the FTSE reach a new peak. The experts at Citigroup (NYSE: C – news) forecast the benchmark index to finish 2014 at 8,000, while Goldman Sachs (NYSE: GS-PB – news) analysts predicted that the index, which celebrated its 30th birthday in January, will reach 7,500.
Should the London index hit a record, it would be mirroring moves seen on the other side of the Atlantic (Frankfurt: 98S.F – news) . In the US, the S&P 500 was today trading at a fresh all-time high, having already set new records last year. The 30-company Dow Jones Industrial closed at a record on the last trading day of 2013. Furthermore, in London the second-tier FTSE 250 has also set new records and last night finished at a high of 16,539.29, up 0.5pc.
The FTSE climbed 14.4pc last year, its best annual performance since 2009. Although there have been worries about a slowdown in the Chinese economy, which is the world’s second-largest, investors have been encouraged by improvements in both America and the eurozone.
Companies are already tapping into improving market sentiment, with a flurry of share sales in recent months.
While stockbroking firm Charles Stanley (LSE: CAY.L – news) expects the FTSE to end the year at 7,400, its investment director, Douglas McNeill, said: “There are lots of risks still around. We mustn’t forget that we’ve had a pretty good run in equities”.
Stress tests measuring health of the eurozone banking system and the threat of deflation in Europe could unsettle markets, he said, as might tensions between Japan and China.