Miners Rise to the Top as FTSE 100 Breaks a Record
Just weeks ahead of a general election that has the potential to destabilize the U.K.'s economic recovery, the FTSE 100 has sliced above 7000 for the first time ever, lifted by a combination of factors--not least a growing belief that the first Bank of England and Federal Reserve rate hike will be pushed out even further into the future.
The BOE's chief economist Andrew Haldane on Thursday argued that there are at least as many reasons to argue that U.K. interest rates should be cut as that they should go up. His own bias seemed to tilt towards further easing.
Meanwhile, the Fed's latest policy meeting delivered a distinctly dovish message, mollifying market concerns that U.S. rates would start going up in the summer. This gave a boost to commodity prices--easier U.S. monetary policy is considered supportive for raw goods markets.
And the FTSE 100 is heavily weighted towards the extractive industries. Basic resources together with oil and gas make up around 22% of the U.K. index by weight.
Even so, the U.K.'s leading index is actually a laggard. The U.K.'s domestically focused FTSE 250 mid-cap index has far outstripped the FTSE 100 during the past few years. And on Friday, the FTSE 100's 0.8% gain was put in the shade by a 1.4% rise by Germany's DAX and a 2.5% surge by Spain's IBEX 35. Over in the U.S., the Nasdaq Composite Index has hit its highest intraday level in nearly 15 years.
Leading the FTSE 100's gains were CRH PLC, the Irish cement firm that's due to buy certain assets from the combined Holcim Lafarge after the two cement giants successfully renegotiated terms of their deal, followed by mining giants Fresnillo PLC, Anglo American PLC, Glencore PLC, BHP Billiton PLC, engineer Weir Group and Tullow Oil PLC.
In the FTSE 250, Vedanta Resources PLC was the big winner, with shares up over 21%.