FTSE latest: UK stocks hit record high as economic optimism sweeps markets

conomic optimism swept London’s FTSE 250 index to a record high today as traders placed their bets on a faster-than-expected recovery for pandemic-hit stocks.

The domestic-focused FTSE 250 — home to companies including Royal Mail, easyJet and ITV — surged as high as 22,177.49 as the benchmark exceeded the previous peak set in the aftermath of Boris Johnson’s December 2019 General Election victory.

The performance represents another milestone in the stock market’s recovery from the pandemic, having yesterday passed the level seen prior to last February’s sell-off.

Optimism around the imminent re-opening of pubs and shops in the UK has fired up the “re-opening” trade, with shopping centre landlord Hammerson, cruise ship company Carnival and bus operator FirstGroup among the FTSE 250 stocks 4% or more higher today.

IG market analyst Joshua Mahony said: “Markets are increasingly confident that the UK vaccination effort will help enable a substantial economic recovery in the coming months.”

The FTSE 100 index, which has lagged the rebound of global stock markets in recent months, is also enjoying a post-Easter bounce after jumping 0.8% to 6,877.12 today as a weaker pound boosted the appeal of dollar earning stocks.

Big risers included BP with a gain of 2%.

There was further cause for economic optimism today when new figures showed the UK services sector returned to growth in March, spurred by a sharp rise in new orders ahead of the easing of lockdown conditions.

The report from the Chartered Institute of Procurement and Supply also detailed the first overall expansion in staffing numbers since the start of the pandemic.

Stock market confidence has been underpinned by unprecedented levels of stimulus by governments and central banks, alongside hopes that the mass vaccination programme will lead to the kind of economic rebound not seen since the 1970s.

The IMF yesterday raised its global growth forecast to 6% for this year but also warned that excessive risk taking could leave investors vulnerable to rising interest rates.

This appetite for risk has driven Wall Street markets to record highs in recent days, most recently after figures showed the biggest increase in US jobs numbers since August.

In contrast, London’s FTSE 100 index is still some way short of the all-time record of above 7,500 set at the start of 2020. This underperformance is likely to result in more M&A speculation, particularly in light of today’s blockbuster private equity bid for Japanese conglomerate Toshiba.