The blue-chip index ended the session at 6,949.63, surpassing the 6,930.2 record close that was set on 30 December 1999 at the height of the dot com bubble. Earlier in the day the index also achieved a new intra-day high of 6,958.89, above the previous record of 6,950.6.
This also means the FTSE 100 has risen 96.88 per cent since the depths of the financial crisis in March 2009; this gain rises to 144.03 per cent once reinvested dividends are taken into account.
Performance of index since Mar 2009
Source: FE Analytics
Investors had been eyeing a new record for the FTSE for some months, despite headwinds such as the election of anti-austerity party Syriza in Greece, the conflict in Ukraine and the prospect of looming interest rate rises.
But it’s worth noting that the UK is relatively late to the party – record highs have been frequently seen among the index’s peers like the S&P 500 and the Nikkei 225.
Reactions to the event have been pouring in thick and fast. We round up some of the best comments by market experts below.
Fidelity Worldwide Investment: “This is a watershed moment”
Tom Stevenson, investment director at Fidelity Worldwide Investment, said: “It’s been a long wait but the FTSE 100 has finally closed above its 1999 peak of 6,930.2. This is a watershed moment. Investors have finally exorcised the ghost of the dot com bubble which has haunted the market for a decade and a half. Of course, what matters is not the actual level of the market but the value it represents. In 1999 shares were grossly overvalued. Today, thanks to rising profits over the years, UK shares are reasonably priced – not cheap but by no means expensive.”
Rowan Dartington: “The world has far more issues than it had in December 1999”
Tim Cockerill (pictured), investment director at Rowan Dartington, said: “The last time the FTSE 100 was at its peak was as we said goodbye to the 20th century and welcomed in the 21st – that all seems like a long time ago now. The world was in a very different place then, technology companies dominated markets, the Twin Towers were still standing and geo-politics was more stable. Much has happened since then and much for the worse.”
“Is a new high important? Stock picking fund managers always suggest they can make good returns in most market condition so the absolute level of the market isn’t so important, but psychologically I think it’s vital. It perhaps puts behind us the events of the past 15 years and says we can move forward. Yet the market will in due course focus on reality rather than hope, which is where its focus seems to be right now ... the world has far more issues to contend with today than it had in December 1999, even allowing for the millennium bug. ”
FxPro: “It looks as though the best gains have been made”
Angus Campbell, senior analyst at FxPro, said: “Equity investors have been riding the wave of cheap money, fuelled by unconventional monetary policies pursued by the world’s central banks which have allowed this bull market to extend well beyond the duration of your average length of a bull market. Many argue that it’s got further to go with the ECB recently entering the ring with their own QE programme, but the higher markets go, the harder they fall.”
“Investors face considerable headwinds in the months ahead and it’s not only the odd geo-political event that has the potential to throw a spanner in the works. The UK general election with its uncertain outcome is just one hurdle investors will have to negotiate, but bigger risks lurk beyond the UK’s shores that threaten to pull the rug from underneath this rally. External factors such as a rapidly slowing Chinese economy and a US economy that has recently been showing signs of fatigue are not to be underestimated, coupled with the fact that the recent US earnings season disappointed. The ECB may just be starting its QE programme in earnest, but the Federal Reserve and Bank of England aren’t too far away from starting to tighten monetary policy.”
“This does not mean that we won’t see the figure ‘7’ in front of the index before long, but it looks as though the best gains have been made and further upside could be limited.”
Whitechurch Securities: FTSE’s P/E still “significantly below” its peak
Whitechurch managing director Gavin Haynes and head of research Ben Willis said: “An index level is not a sensible way of measuring the attractiveness of a stock market. A more realistic valuation metric of shares is the price/earnings ratio. Today the FTSE 100 trades on a P/E of 16x. This is broadly in line with the historical average, but significantly below the 27x at the market peak in 1999, when valuations were bloated by huge expectations of growth from internet companies. If the FTSE 100 was trading at 27x earnings today it would be at 11,370.”
“If the index level has only now moved higher than it was 15 years ago, investors may well conclude that they would have made little money from investing in the UK stock market over this period. However, this ignores the power of the dividend. Taking into account dividends, the total return over this period has been 66 per cent, significantly higher than the average savings account. Even if you take charges into account, a FTSE 100 tracker would still have provided a 46 per cent return, marginally beating cash.”
Performance of index since 30 Dec 1999
Source: FE Analytics
AXA Wealth: “We could expect multiple new record highs this year”
Adrian Lowcock (pictured), head of investing at AXA Wealth, said: “The December 1999 all-time high has been a major psychological barrier for investors over the past 15 years. In the past two years alone the FTSE 100 had come close to reaching a new record high on 20 separate days – where it had come within 100 points. Yesterday is a watershed moment and investors can finally put the dot com bubble that caused the last high behind them.”
“The stock market has been held back by concerns over the oil price, and the outlook for when the US will begin to raise rates. With these concerns having receded, for the time being at least, investors are becoming more confident. It is difficult to predict where the market will be by the end of 2015 let alone beyond that, but we could expect to see multiple new record highs this year.”
Trustnet Direct: “There are plenty of bear traps lurking along the way”
Tony Cross, market analyst at Trustnet Direct, said: “After last night’s euphoria which saw London’s FTSE 100 push out to fresh all-time highs, the index may have opened a few points lower but there are hardly what could be construed as any broad-based signs of profit taking. Natural resources stocks – which played no small part in driving the index higher – are sitting a little lower, but the biggest faller in early trade is Weir Group with the market reacting to its rather bleak full-year results.”
“At the other end of the scale and again its earnings that are dominating – St James’s Place and Whitbread are both charging ahead after providing the market with some upbeat news, but once this is all digested it could well be a case of back to the waiting game. Some may already be talking of the FTSE at 7,000 and it’s not to say it won’t happen, but there are plenty of bear traps lurking along the way.”