LONDON (Reuters) - The FTSE hit another record high on Monday as an easing in U.S.-Chinese trade tensions and a strengthening dollar gave more fuel to the internationally-exposed index.
The index of Britain's biggest companies .FTSE ended the session up 1 percent, hitting a new record high of 7,868.12 points. The mid-cap FTSE 250 .FTMC also hit a record of 21,151.32 points, up 0.7 percent.
UK equities enjoyed a broad-based rally, with all sectors making gains, while financials and energy provided the strongest boost. The FTSE 100 has gained nearly 5 percent so far this month.
“I don’t think sentiment has changed towards the UK stock market dramatically over the last two to six months,” said James Illsley, UK equity portfolio manager at JP Morgan Asset Management, saying the FTSE 100’s exposure to international growth was instead the most likely driver.
“This morning news of the easing of trade tensions for China and the U.S. has been driving stocks up,” he added.
On a calmer day for corporate updates, Ryanair (RYA.I) stole the spotlight. Its shares had a strong swing back into positive territory, up 5.1 percent, having fallen as much as 3 percent at the open.
The budget airline said higher fuel and staff costs would hurt profits in its new financial year, but investors focused on Ryanair’s record earnings for 2017-2018.
“We believe Ryanair’s industry-leading competitive advantage remains and thus see no reason to change our 12-month ‘outperform’ rating,” said Davy Research analysts.
Banks HSBC (HSBA.L) and Barclays (BARC.L), and insurance company Prudential (PRU.L), provided the big boosts, up 0.7 to 1.1 percent. Oil majors Royal Dutch Shell (RDSa.L) and BP (BP.L) also climbed as crude prices gained after China and the United States put a looming trade war “on hold”.
“We are overweight financials with some of the banks and insurers, reflecting a cyclical exposure in terms of global growth continuing to do well,” said Illsley.
Despite the index reaching new highs, analysts continue to downgrade earnings for the FTSE 100. The recent strengthening of sterling is likely to blame for this.
“You could see some of that technical FX downgrade reverse,” said Illsley. “When you actually talk to companies by and large they are positive.”
Overall year-to-date, earnings for the FTSE 350 have been revised up 2.9 percent, according to Goldman Sachs analysts, though they say all of this is attributable to commodity-related sectors.
Reporting by Helen Reid and Kit Rees