London stock market strikes record as sentiment lifts globally

April 23, 2024 07:10 PM

London's FTSE 100 stocks index hit record highs Tuesday, catching up with major global peers that have struck all-time peaks this year as inflation cools.

Sentiment was upbeat across major world indices thanks to easing Middle East worries and hopes of interest-rate cuts, while traders are keenly awaiting the release this week of more major earnings and key US inflation data.

London's FTSE 100 reached 8,076.52 points shortly after the open, surpassing a record 8,047.06 struck in February last year, though it pared down gains in afternoon deals.

"Good news as this is, it does highlight the sluggishness of the UK's top equity index when compared to its US and European competitors which hit a string of successive records throughout the first quarter of 2024," said David Morrison, senior market analyst at financial services provider Trade Nation.

But, he added, "let's not be too churlish as it could be we see the FTSE outperform its rivals in the years to come should investors seek out dividend paying value stocks rather than techy growthy ones."

The index has in recent weeks been lifted by weakening of the pound, particularly against the dollar, as markets anticipate cuts to UK interest rates in the coming months thanks to slowing price rises.

A weaker pound benefits FTSE-listed British multinationals that make big earnings in foreign currencies. Sterling gained against the dollar and euro on Tuesday after falling earlier in the day.

The Paris and Frankfurt stock markets won a lift from news of an improvement to business activity in the eurozone this month.

Wall Street opened higher on a busy week on the corporate front, with investors keenly awaiting first-quarter earnings from Elon Musk's Tesla later in the day.

The electric car maker, which enjoyed scorching growth for most of 2022 and 2023, has experienced setbacks that analysts say have raised the stakes for the first-quarter report.

"The expectations regarding Tesla's Q1 performance are weak -- to say the least," said Swissquote bank analyst Ipek Ozkardeskaya.

Spotify swings to profit

Other companies are releasing financial statements, with observers saying that traders are keen to see strong earnings as well as positive outlooks.

However, there is a worry that equities could take a hit if the results disappoint, with the surge in markets in recent months partly helped by bets on firms providing bumper returns.

Spotify shares soared by almost 14 percent in New York after the music streaming giant reported an increase in the number of paying subscribers and a rare operating profit for the first quarter.

General Motors shares rose more than three percent after it reported higher profits thanks to continued strength in North America that offset a loss in its China business, enabling the carmaker to lift its forecast.

Key data out of Washington this week will provide a fresh idea about the Federal Reserve's rate-cutting plans, with updates on US gross domestic product and monetary policymakers' preferred gauge of inflation the standouts.

The personal consumption expenditures index, due Friday, comes after three months of above-forecast readings on US consumer prices that have seen investors lowering their outlook for Fed rate cuts this year.

The apparent easing of Iran-Israel tensions after the rivals launched missile attacks against each other continued to weigh on oil prices.

Key figures around 1345 GMT

New York - Dow: UP 0.4 percent at 38,402.55 points

New York - S&P 500: UP 0.7 percent at 5,046.31

New York - Nasdaq Composite: UP 0.9 percent at 15,595.23

London - FTSE 100: UP 0.2 percent at 8,041.93

Paris - CAC 40: UP 0.6 percent at 8,088.64

Frankfurt - DAX: UP 1.3 percent at 18,086.07

EURO STOXX 50: UP 1.1 percent at 4,990.73

Tokyo - Nikkei 225: UP 0.3 percent at 37,552.16 (close)

Hong Kong - Hang Seng Index: UP 1.9 percent at 16,828.93 (close)

Shanghai - Composite: UP 0.7 percent at 3,021.98 (close)