Markets hit fresh highs
BOOMING stocks hit fresh highs on both sides of the Atlantic yesterday as upbeat investors kept on pumping cash into equities, fuelled by economic recovery and low interest rates.
The surge in stocks follows a flood of merger and takeover activity, with Facebook’s $19bn (£11.4bn) buyout of messaging service Whatsapp last week setting the tone for an astonishing month on the markets.
Rampant investors pushed the FTSE 100 to a 14-year high yesterday, snapping up shares in firms like Vodafone and Bunzl, while the S&P 500 in the US hit an all-time high.
Investors defied weak Chinese economic data yesterday and appear fully recovered from the turmoil which struck emerging markets last month.
Much of that chaos around the world came from the Federal Reserve in the US slowing the pace at which it prints money, in recognition that the economic recovery is taking hold.
That pulled money out of emerging markets and back to countries like the US and UK.
In addition, the Fed and the Bank of England have been clear interest rates will stay low for a long time to come – giving investors the unprecedented benefits of a strong recovery combined with ultra-cheap money.
Vodafone stocks shot up 6.68 per cent and Bunzl’s jumped 6.88 per cent, while William Hill followed the pair with a 3.92 per cent increase and Hargreaves Lansdown’s stock increased 3.27 per cent.
New deals like the mooted merger of Carphone Warehouse and Dixons underline the trend for M&A driven by the optimism surging through markets. As a result, Dixons’ stock rose 6.66 per cent and the Carphone Warehouse’s 8.82 per cent, pushing the FTSE 250 up 0.28 per cent.
The FTSE 100’s 0.41 per cent rise to close at 6865.86 takes it to within a hair’s breadth of its highest level ever, 6930 recorded at the peak of the dotcom bubble in 1999. The index is less than one per cent below that peak.
Meanwhile the S&P 500 index in the US hit an all-time high of 1858.71 in the middle of the day, before falling back a touch to close at 1847.61, a rise of 0.62 on the day. Healthcare firm Humana led the way, rising 10.57 per cent, followed by a 4.38 per cent jump for Dun and Bradstreet.
“Despite the rather anaemic data of last week in the US, the Street of Dreams refuses to be downhearted and there was no sign of investors having a dose of the ‘pip,’” said Panmure Gordon’s David Buik.