The FTSE 100 Index has closed above 7,500 for the first time as higher-than-forecast inflation data and confidence over Britain’s prospects under a Tory government drove stocks higher.
London’s blue chip index reached a mid-session record of 7,533.70 points in afternoon trading, before settling at an all-time closing high of 7,522.03 – up 67.66 points or 0.9% for the day.
It was a third consecutive record close for the FTSE 100, which reached 7,454.37 a day earlier. Markets were reacting positively to signs that Theresa May’s Conservative Party will secure a majority in the General Election on June 8, while investors started to abandon bonds for stocks after data showed inflation reached 2.7% in April.
Jasper Lawler, a senior market analyst at London Capital Group, said: “The UK stock market reached a new milestone today when the FTSE 100 hit 7,500 for the first time. “Investors seem to be feeling confident about the outlook for Britain under what is expected to be the biggest Conservative Party majority since Margaret Thatcher.
He also pointed to the latest release of Consumer Price Index (CPI) data from the Office for National Statistics (ONS), which showed price inflation in the UK reached its highest level since September 2013.
CPI rose to 2.7% last month as the Brexit-hit pound, electricity price hikes and rising air fares tightened the squeeze on consumer spending.
“Rising inflation tends to make stocks relatively more attractive to bonds, which could make the next big hurdle for the FTSE of 8,000 more achievable,” Mr Lawler added. Across Europe, the French Cac 40 fell by 0.2% while the German Dax was flat. In oil markets, Brent crude prices extended major gains made a day earlier, rising 0.2% to 51.87 US dollars per barrel.
It comes after energy ministers from Russia and Saudi Arabia took further steps to tackle oversupply in the market by extending production cuts from the middle of 2017 until March next year. Kuwait joined the call on Tuesday ahead of an Opec meeting on May 25. In UK stocks, Vodafone shares jumped 8.35p to 219.454p, despite reporting annual losses of €6.1bn after taking a mammoth hit at its Indian arm.
Excluding the Indian division, underlying earnings lifted 5.8% to €14.1bn.
EasyJet shares were one of the worst performers on the FTSE 100, dropping 95p to 1,215p after logging a £236 million pre-tax loss in the six months to March 31, which compares with an £18 million loss in the same period last year.
Crest Nicholson fell 16.5p to 620p. The housebuilder said that average selling prices hit £418,000 in the six months to April 30, but the sales rate per site dropped from 0.9% to 0.8%. Mr Kipling cakes firm Premier Foods saw shares fall 0.75p to 42.25p following an 11% drop in adjusted pre-tax profit to £74.2 million in the year to April 1.
Shares in the Clydesdale and Yorkshire Banking Group (CYBG) dropped 9.5p to 280.6p after it revealed that restructuring costs and another £150 million bill for payment protection insurance mis-selling left bottom line profits 21% lower at £46 million for the six months to March 31.
The biggest risers on the FTSE 100 were Vodafone Group up 8.35p to 219.45p, Fresnillo up 44p to 1,563p, Rio Tinto up 81p to 3,100.5p, and Kingfisher up 9.2p to 358.2p. The biggest fallers were Hargreaves Lansdown down 123p to 1,324p, easyJet down 95p to 1,215p, Micro Focus International down 76p to 2,424p, and Severn Trent down 36p to 2,393p.