The UK's benchmark stock index, the FTSE 100, has reached a new all-time high, driven by investor shifts away from tech stocks and expectations of interest rate cuts in 2025.
The UK's benchmark stock index has reached another all-time high, extending a month of record-breaking performance. The FTSE 100 index, comprising the most valuable companies listed on the London Stock Exchange, closed at 8,666.65, surpassing the record set on Thursday night after four consecutive days of increases. January has marked the best month for the FTSE 100 in over two years.
This surge follows a trend where investors have shifted away from tech stocks, particularly after the emergence of Deepseek, a Chinese artificial intelligence chatbot that demonstrated the potential for creating such technology with less investment and faster development cycles compared to its US counterparts. Companies specializing in AI had experienced significant value appreciation in recent years. However, multinational mining, oil, and gas companies, which form a substantial portion of the FTSE 100, have benefited from this investor shift towards more established sectors.Contributing to the latest record high are market anticipations of further interest rate cuts in 2025. This prospect of lower borrowing costs is likely to stimulate spending and boost economic activity. Three rate cuts are now anticipated for this year. Earlier in January, a series of record-breaking closes occurred, driven by a weakened pound, which made purchasing shares with sterling more attractive. This reduced cost increased demand and propelled share prices upward. The FTSE 100 comprises numerous mining and international oil and gas companies, along with prominent UK banks and supermarket chains. Familiar names include Barclays, Natwest, HSBC, and Lloyds, as well as Tesco, Marks & Spencer, and Sainsbury's. Other well-known constituents include Rolls-Royce, Unilever, easyJet, BT Group, and Next. FTSE stands for Financial Times Stock Exchange. If a company's share price declines substantially, it can fall out of the FTSE 100 and into the broader FTSE 250 index, which includes more UK-based companies. Conversely, if FTSE 250 companies experience significant share price increases, they may ascend to the FTSE 100. This impressive performance of the FTSE 100 is part of a wider upward trend observed across European stock markets
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