The FTSE 100 index recorded a new high as the pound fell to $1.23, benefiting dollar-earning companies like Shell and BP. Analysts cite economic conditions and currency valuations as significant influencers of the UK stock market.
The FTSE 100 index reached a new record high, closing at 8,023.87 points after Monday’s trading session. This increase coincides with a decrease in the value of the pound, which fell to $1.23 against the US dollar. The weakening of the sterling boosts the profitability of many companies within the FTSE 100 that generate their revenues in dollars, such as oil majors Shell and BP.
Retailers including Sainsbury’s, Marks & Spencer, Tesco, and Ocado also saw significant gains, influenced by investor optimism linked to improving economic conditions and hopes for reduced geopolitical tensions, which may lead to lower oil prices.
Financial analyst Rachel Winter of Killik & Co explained that the primary reason for the FTSE 100’s robust performance is the pound’s depreciation against the dollar. She noted that while the FTSE 100 has been performing well, its growth is slower compared to European and US markets. London has faced challenges attracting new stock market listings, with companies like Shell considering moves to the US, where they can potentially secure higher share prices and compensation packages for executives.
Overall, global market conditions and currency valuations continue to play a significant role in influencing movements within the UK stock market. The strength of the US dollar, tied to persistent inflation, is expected to keep US interest rates higher for a prolonged period, further affecting the performance of indices like the FTSE 100.
