FTSE 100 Reaches Record High Amid Global Tech Sell-Off
London's benchmark index defied a worldwide decline in technology stocks to hit a new intraday peak, boosted by domestic earnings and rising oil prices.
The FTSE 100 index surged to a new intraday record high on Tuesday, reaching 10,951 points, surpassing its previous peak from February. The index closed 0.3% higher at 10,908.41, showing resilience against a global tech sell-off that impacted markets in the US and Asia.
This rebound is particularly noteworthy for the FTSE, which had fallen below 10,000 in March. The index's ascent was driven by a combination of factors, including positive earnings reports from UK companies like engineering firm Weir, software group Sage, and consumer goods giant Reckitt. These companies saw significant share price increases following their financial updates.
Additionally, a rise in oil prices, which climbed above $90 a barrel due to Middle East tensions, bolstered UK-listed energy companies such as BP and Shell. Their shares experienced notable gains.
Susannah Streeter, chief investment strategist at Wealth Club, commented on the market's performance, noting that the FTSE 100 has regained momentum. She highlighted that investors are being drawn to the index's defensive qualities and companies with tangible cash flows, reliable dividends, and established pricing power. This shift represents a rotation away from more volatile technology stocks.
London's market has also benefited from being insulated from the sharp declines seen in global technology listings, particularly from chip-makers like Nvidia, AMD, and Micron in the US, and Samsung and SK Hynix in South Korea. The Kospi index in South Korea was particularly hard-hit, falling 6% on Tuesday after an 11% drop the previous day.
Despite reaching a new high, the FTSE 100 has also faced challenges, including a trend of UK companies being acquired by foreign entities at low valuations. So far this year, several FTSE 100 companies, including energy group DCC, laboratory testing firm Intertek, and insurer Beazley, have accepted takeover offers. This trend is often attributed to the perceived undervaluation of UK equities compared to those on other international markets. Streeter noted that the FTSE 100 is still considered undervalued, trading at a significant discount to US equities on earnings multiples, positioning it to benefit from a potential swing towards greater market stability.