THE FTSE100 has entered bull market territory, closing yesterday at 6,682.86 - more than 20 per cent higher than the low of 5,537 that it hit on 11 February this year.
The bounce has been led by a recovery in mining stocks, plus a boost from the falling pound which has augmented the Sterling value of overseas earnings streams generated by many of the big blue chips.
Analysts say the positive mood was helped by the confirmation of Theresa May as Conservative party leader, along with the expectation of an interest rate cut and possibly news of more quantitative easing from the Bank of England on Thursday.
The FTSE250 also enjoyed a recovery, up nearly three per cent and hitting its highest levels since the drop it endured from its 23 June peaks.
“The FTSE has been tipped into a bull market by the emergence of Theresa May as Prime Minister, though the whiff of some loose monetary policy coming from the Bank of England this Thursday probably helped the index over the line too. The role played by the commodity behemoths should not be under-estimated either,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.
Mining giants BHP Billiton and Rio Tinto are trading around 50 per cent up on their February price, with Glencore doubling in price since 11 February.
Khalaf added: “Overall the FTSE has definitely proved resilient in the face of all the uncertainty created by the Brexit vote, though that really is testament to the international make-up of the index, and the long-standing faith in central bankers to come to the rescue by turning on the printing presses. Indeed if Mark Carney fails to act on Thursday, the market will be disappointed.”
The pound had initially come under pressure ahead of the expected rate cut from the Bank of England later this week. However, the confirmation that Andrea Leadsom had withdrawn from the Conservative Party leadership race helped the pound rally back through the $1.30 level.
Meanwhile in the US, the Nasdaq Composite hit its highest mark of 2016 yesterday as US stocks continued a rally sparked by rising economic optimism.