The FTSE 100 rose to a fresh record high on the first official trading day of 2017 as the year-end market rally continued into January.
The UK’s blue chip index soared past last Friday’s all-time closing high of 7,142.83 to reach 7,205.21.
Investors were seemingly optimistic following last week’s so-called ’Santa rally’ – a market phenomenon where stock prices traditionally rise during the final trading days of the year.
Connor Campbell, a financial analyst at SpreadEx, said: “For now, at least, investors are ignoring the potentially disruptive events littered across 2017 – most pertinent to the FTSE being March’s triggering of Article 50 and the impending announcements related to the banking sector’s decision whether or not to stay in the UK post-Brexit – to get behind the UK index.”
He added that the FTSE was being supported by crude oil prices, which rose 2.4% to 58.08 US dollars per barrel (£47.29), on hopes that a deal between Opec and other major producers to curb supply would help a growing supply cut and buoy prices long-term.
The deal, which officially came into effect on Sunday, helped push BP shares higher by 1.4% and Royal Dutch Shell’s ’B’ shares up by 0.5%.
But the stronger pound could keep the FTSE 100 from reaching another closing high on Tuesday, as many of the index’s multinational companies tend to benefit from earnings in currencies – such as the US dollar – which are stronger than sterling.
Sterling rose 0.1% against the US dollar and 0.7% against the euro after the Markit/CIPS manufacturing purchasing managers’ index (PMI) rose to 56.1 in December, up from 53.6 in November and above economists’ expectations of 53.3.
A reading above 50 indicates growth.
[graphiq id=”hEVMpnUxwEt” title=”FTSE 100 – 1 Year” width=”600″ height=”531″ url=”https://w.graphiq.com/w/hEVMpnUxwEt” link_text=”FindTheData | Graphiq” link=”http://time-series.findthedata.com/l/18396021/FTSE-100″]
Manufacturing gains were driven by the Brexit-hit pound, which continued to boost demand by making UK exports cheaper on the international market.
The data pushed the pound higher by 0.1% against the US dollar to 1.228 and up 0.8% against the euro to 1.181.
Stocks across Europe were mixed, with the French Cac 40 up 0.4% and the German Dax down 0.08%.
In the UK, London Stock Exchange shares fell 0.1% after the group agreed to sell its French clearing business LCH to Euronext for 510 million euro (£434 million).
The move is part of an attempt to see off anti-trust concerns raised by the European Commission over its £21 billion tie-up with Deutsche Borse.
Britvic shares rose 1.3% following news that the soft drinks giant will acquire Brazilian juice firm Bela Ischia for 218 million Brazilian reals (£54.5 million) as part of international expansion plans.
It marks the latest deal for the Robinsons squash maker in the country – which it describes as the “world’s largest concentrates market” – having snapped up another juice firm, Ebba, in 2015.
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