The U.K.’s FTSE 100 equity index
has hit 8,000 for the first time as investors warm to its mix of low-valued blue-chips, many with exposure to revitalized sectors such as energy, mining and financials. “It’s all about opportunity, about the long haul, and sectors that might have been shunned just a few months ago are finding that investor interest has been rekindled,” said Danni Hewson, AJ Bell financial analyst.
The City of London’s benchmark was trading at 8,040 shortly after the open on Thursday. It briefly popped above 8,000 on Wednesday, only to close a few points shy of the landmark. The Footsie, as it is known, has gained 7.6% year to date and has bounced about 60% since plunging below 5,000, an eight-year low, at the peak of the COVID panic in March 2020.
The rebound has been driven in part by some renewed optimism among global investors as they bet that falling inflation in the U.K. will soon encourage the Bank of England to ease the pace of interest rate rises. Declining energy costs in Europe and the opening up of China’s economy as COVID restrictions are lifted has also helped sentiment, and consequently since the start of 2023, the Europe-wide Stoxx 600
is up 9.3%. Wall Street’s S&P 500
has gained 8% for the year to date. Popular U.S.-listed exchange-traded funds investing in Europe including the Vanguard FTSE Europe ETF
and the JPMorgan BetaBuilders Europe ETF
are each up about 10% this year. “The recent outperformance of Europe versus the U.S. is arguably the former’s best relative run in over 20 years,” said Graham Secker, equity strategist at Morgan Stanley. “We see four main catalysts behind Europe’s recent rally: i) economic news flow is holding up better in Europe than the U.S.; ii) lower EU gas prices; iii) Europe is more geared to China; iv) better earnings revisions in Europe than the US,” Secker recently wrote in a note to clients. However, the Footsie ha …