FTSE 100 closes at near record high boosted by higher commodity prices and hopes for UK economy.

• The FTSE 100 reached a fresh yearly high and hovered close to record levels, before retreating.
• London’s blue-chip index pushed above 8,044, close to its previous intraday record set in February 2023
• The previous closing high of 8,014.31 may still prove elusive.
• Stocks have been boosted by better prospects for the UK and higher commodity prices.
• Shares in Antofagasta and 3i Group reached fresh record highs.

Susannah Streeter, head of money and markets. Hargreaves Lansdown:

‘’The FTSE 100 has been tantalisingly close to breaching an all-time intraday record before a frustrating retreat in afternoon trade. The blue-chip index regained its mojo, as prospects brightened for the UK economy, while geopolitical tensions pushed up commodity prices, boosting miners and energy giants. Gold has touched fresh record highs amid concerns about an escalation of conflict in the Middle East, while Brent Crude jumped above $91 a barrel. However, warnings about an imminent attack by Iran on Israel appeared to have sparked nervousness among investors and saw the FTSE 100 slip further away from record levels.

Mexican gold miner Fresnillo has claimed the top spot in the FTSE 100, with gains of more than 6%, closely followed by Glencore, and Anglo American helped by iron ore prices rebounding from lows not seen since November 2022. Chilean miner Antofagasta reached a fresh record high, with shares climbing by more than 3%. It’s been helped by a surge in the price of copper, which has been hovering around the highest levels in a year. Private equity company 3i Group has also surged to a new record level. Its investments, such as in Dutch discount retailer Action, have been paying off with strong momentum in 2024, helping give more wings to the share price.

With the UK economy eking out growth in February, it’s added to hopes that the UK’s recession is in the rear view mirror. With slender green shoots appearing it’s benefiting stocks reliant on the financial health of consumers and companies. Lloyds Bank, seen as a bellwether for the UK economy, gained 2%. With growth not shooting the lights out, and inflationary pressures easing, there is still plenty of optimism around about the prospect of interest rate cuts coming in the summer, which has given the FTSE 100 an extra surge of power. As borrowing costs are forecast to fall amid a more slightly more positive outlook for the economy, housebuilders have also headed higher on hopes that stronger demand will return for new homes. Next has also clawed back ground, amid more clement conditions for consumers. Shares reached record highs earlier this month thanks to its prowess in the highly competitive retail space. Its crown continues to gleam in the retail industry, having weathered the cost-of-living storm admirably, posting record revenues and profits for 2023.

A handful of other FTSE 100 listed companies which breached record levels earlier in the month, are on course to climb back up to those highs including Rolls Royce, Melrose and BAE Systems. Aerospace stocks have been pushed higher by heightened geo-political tensions and post-pandemic demand. Under the leadership of Tufan Erginbiliç, Rolls Royce has revved up its engines over the past year. A restructuring programme has prompted improvements in productivity, while disposals have lightened the load of recent financial scars.  Melrose is now focused exclusively on the aerospace industry and the upturn in the aviation sector, with pent-up demand following on from the pandemic is translating into strong sales. As geopolitical tensions have crept higher, there continues to be high interest in BAE Systems. With violence having widened in the Middle East, and Ukraine appealing for more weapons to repel Russia, there is an expectation that military budgets will keep expanding. This has been reinforced by defence chiefs in Nordic countries and the UK, calling for better military preparedness over the next decade.’’

“The FTSE has been lifted higher by the fresh breeze in the sails of the UK economy. It’s still on a very slow course of growth but, with slender green shoots appearing, it’s benefiting stocks reliant on the financial health of consumers and companies. With growth not shooting the lights out, and inflationary pressures easing, there is still plenty of optimism around about the prospect of interest rate cuts coming in the summer, which has given the FTSE 100 an extra surge of power.

Gold’s safe-haven credentials glimmered even brighter amid concerns about an escalation of conflict in the Middle East, while Brent Crude jumped by more than 2% to hover around $92 a barrel. Investors appeared rattled in early afternoon trade over warnings about an imminent attack by Iran on Israel, but the index gained back ground to edge to a record high at the close.

The FTSE 100 has clearly regained its mojo as the defensive nature of the index comes to the fore. A large handful of FTSE 100 listed companies, which breached record levels earlier in the month, have been climbing back close to those highs, including Rolls Royce and BAE Systems. Aerospace stocks have been pushed higher by heightened geo-political tensions and post-pandemic demand. With violence having widened in the Middle East, and Ukraine appealing for more weapons to repel Russia, there is an expectation that military budgets will keep expanding. This has been reinforced by defence chiefs in Nordic countries, and the UK, calling for better military preparedness over the next decade.”