The FTSE 100 hit a new all-time high as it rose above 8,100 to exceeded the previous high set in February 2023. The growth of US and Japanese equities has attracted a lot of attention, but UK equities have been making steady gains this year. The recent rise in the UK’s large cap index is partly due to strong gains from energy and mining stocks but the decline in the value of the pound has played a part. There has also been some buying by overseas investors concerned about the high valuations of some US stocks and have been tempted by the lower valuations in the UK.
The decline in sterling has a significant impact on FTSE 100 earnings due to the high proportion of multinational companies, particularly energy and mining stocks, which generate significant earnings in US dollars. Stocks in the FTSE 250 are less affected by currency movements. Since early March, sterling has fallen from $1.28 to $1.23 this week. During this time the FTSE 100 has risen 5.6% compared to a gain of 2.5% for the FTSE 250.
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