BRITAIN’S benchmark equity index rose yesterday to its best closing level since late 2000, helped by rising bank stocks, and analysts said there was little holding it back from its all-time highs.
Interest rate cuts and injections of liquidity by central banks have hit returns on bonds, driving investors to seek the better returns on offer from equities, spurring a global stock market rally over the last year.
The blue-chip FTSE 100 index closed up by 0.5 per cent, or 32.57 points, at 6,755.63 points – its highest closing level since September 2000.
Germany’s DAX and the US Dow Jones Industrial Average have already hit record highs this year, and IG analyst Brenda Kelly said the next target for the FTSE 100 could be its record intraday peak of 6,950.60 points in December 1999.
Securequity sales trader Jawaid Afsar also said there was little to hold back the FTSE.
“It’s grinding higher, and there’s no real selling pressure. Everyone keeps trying to call the top of the market but any wobble is another occasion to buy into it. The momentum is still bullish,” said Afsar.
Part-nationalised lender Royal Bank of Scotland led the FTSE leaderboard with a 4.5 per cent gain, which traders attributed to an upgrade on the stock by broker Numis.
RBS’s rise enabled the UK banking sector to advance 0.9 per cent, which gave one of the biggest lifts to the FTSE 100 which has risen 14.5 per cent since the start of 2013.
EGR Broking managing director Kyri Kangellaris said some investors may look to sell equities in order to book profits on the rally so far this year at the 6,850 point mark – a level at which the FTSE hit a high in 1999 before then falling sharply as the Internet bubble burst at the start of 2000.
“I still think people should look to take profits,” he said.
Meanwhile European shares reached new five-year peaks yesterday, supported by strength in the autos and travel sector, where budget airline Ryanair’s stock hit a record high on the back of strong earnings.
Travel and leisure stocks gained 1.1 per cent, led by a 6.9 per cent jump in Ryanair after it reported expectation-beating earnings for the past year.
The pan-European FTSEurofirst 300 closed 0.3 per cent higher at 1,252.09, its highest close since June 2008. Trading was quiet because stock markets in Switzerland, Austria, Denmark and Norway were shut for a holiday.
Car makers were the biggest sectoral gainers. They rose 2.3 per cent to take gains since Friday to 5.3 per cent, when the European car market snapped an 18-month streak of contraction. Car makers such as Volkswagen BMW and Daimler joined airline Lufthansa as the strongest gainers on the DAX.