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The FTSE 100 reached 9,000 factors for the primary time on Tuesday, as UK shares profit from world buyers diversifying away from the US amid uncertainty over President Donald Trump’s commerce warfare.
The UK blue-chip inventory index has outperformed the S&P 500 and the Stoxx Europe 600 indices up to now this 12 months, having climbed 10 per cent.
UK shares have benefited this 12 months from higher investor curiosity in non-US belongings, a development prompted by concern about Trump’s unstable policymaking.
“It’s a very good place to cover,” stated Emmanuel Cau, head of European fairness technique at Barclays.
The UK reached a partial commerce settlement with the US in early Might, which some analysts say has given the London market a bonus over its European friends.
“So long as we’ve this tariff overhang, the FTSE 100 must be doing nicely . . . in comparison with indices on the continent being capped by tariff uncertainty and euro power,” Cau stated.
The index touched the brand new file in early buying and selling on Tuesday morning, earlier than later falling again to shut 0.6 per cent decrease on the finish of the day, under the 9,000 mark.
Luca Paolini, chief strategist at Pictet Asset Administration, stated: “We just like the UK market: an inexpensive outdated financial system market with the correct mix of defensives and cyclicals.”
Low valuations of London-listed shares have additionally attracted these searching for completely different locations to take a position this 12 months.
The FTSE 100 trades at a price-to-earnings ratio of about 17 instances, in contrast with 27.3 for the S&P 500, in line with LSEG information.
“Persons are freaked out about Europe with the tariffs, so the UK is sort of a ‘secure haven’ from a valuation perspective,” stated Neil Birrell, chief funding officer at UK investor Premier Miton, including that the UK’s commerce settlement “offers a level of consolation to buyers”.
Cau stated the FTSE 100 was “largely benefiting from power in just a few massive sectors”, together with mining, telecoms, financials and utilities.
Defence shares have been a few of London’s high performers up to now this 12 months. Shares in BAE Techniques have risen about 65 per cent because the begin of the 12 months, whereas Rolls-Royce has climbed 75 per cent.
Monetary corporations have additionally boosted the index after a powerful begin to the 12 months. Shares in Lloyds Financial institution are up about 41 per cent and Prudential has elevated about 47 per cent.
Nonetheless, buyers stated the UK authorities’s tight fiscal place stays a barrier to additional development.
“I’ll battle with the UK till we’ve obtained some extra certainty on the fiscal place,” stated Birrell.
Barclays’ Cau stated “if we see a correct bond market strop” in regards to the UK’s fiscal place, then “there could be a ‘promote UK’ second”.
Extra reporting by Ian Smith and Ray Douglas
