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FTSE 250 hits another record high

FTSE 250 hits another record high

The FTSE 250 closed at a record high for the fourth day in a row, signalling renewed confidence in the British market.

The index closed at 18,715 on Friday (10 February), setting the fourth consecutive record closing high.

This mirrors the record highs seen in the FTSE 100 due to the falling value of the pound.

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Richard Stone, chief executive at the Share Centre, said much has been made of the rise in the FTSE 100 index since the Brexit vote, with the index having a record run at the start of this year.

The plunge in the pound means that overseas revenues and earnings are worth more in absolute terms in sterling and since the majority of the FTSE 100 companies’ revenues and earnings coming from overseas, this was the main driver for the rise in equity valuations.

The FTSE 250 has a greater predominance of UK-focused businesses, and Mr Stone said the fact equity prices have now risen here too, shows a renewed sense of confidence among investors in this market and in the UK.

He pointed to comments from large international businesses which see a strong future for the UK outside of the European Union, and the Bank of England’s improved forecast for UK growth.

The combination of these events, he said, has helped boost confidence.

“The fall in sterling will increase import prices for those firms who buy in components or services from overseas. Inflation will rise and likely squeeze consumer spending as real incomes come under pressure. 

“However, looser fiscal policy, increased government infrastructure spending and continued low interest rates, mean this remains a largely benign environment for UK companies.”

Mr Stone also said that those who do export to the EU know that for the next two years the UK will still have full access to the single market, and their prices have fallen because of the drop in sterling, making them more competitive and attractive to buyers than ever. 

“The same is true for the tourism industry with the UK now a substantially more attractive place for visitors and tourists to come and spend.

“The debate over whether the pain of Brexit forecast by the experts has gone away or just been deferred will continue to rage – but in the short term there is much for companies to prosper from and the sight of record stock market values reflects that.”