FTSE breaks 6,300 mark – as sterling slides to deeper lows

 
Ben Southwood
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THE FTSE100 index rose through the 6,300 barrier to a 56-month high during yesterday’s trading, just as sterling dived to a 13-month low against the euro, and a five-month low versus the dollar.

The index closed up 9.96 points – 0.2 per cent – at 6,294.4, with more than half of that coming from a one per cent gain in the price of HSBC. But during the day, the index hit 6,311.26, the highest level it has reached since May 2008.

This means the UK’s 100 largest firms have added some 5.4 per cent to their collective value since markets opened on 2 January, bringing the index from 5,969.5 to its current level just under 6,300.

And yesterday’s currency movements were just as marked. Pound sterling lost 0.8 per cent against the dollar to reach a five month low of $1.5673. Sterling also dived 0.7 per cent against the euro, to €1.1643, with pounds buying fewer euros than at any point in the last 13 months.

Lee McDarby at Investec put this move partially down to Mark Carney’s speech last week, in which the incoming Bank of England governor said monetary policy was not “maxed out,” and that he was willing to consider policy frameworks other than the traditional inflation target. This hints at nominal GDP level targeting – a policy that could see increased monetary intervention.