[ 2015-03-21 ]

FTSE 100 breaks above 7,000 for first time
The FTSE 100 has risen above 7,000 for the first
time and hit a new record high.

Britain's benchmark stock index rose as high as
7,018.24 on Friday afternoon - setting a new
intraday peak - and was up 0.7pc at 7,009 with
less than an hour to go before the end of the
session.

The 7,000 level was seen as psychologically
important for the market, which is expected to
press higher now that the barrier has been
overcome.

The FTSE 100 has set a series of new all-time
highs in recent weeks, having finally overcome its
dotcom bubble peak last month after a wait of more
than 15 years.

Boosted by the ultra-loose monetary policies of
central banks around the world, and in particular
the recent launch of quantitative easing by the
European Central Bank, Britain's leading index of
shares has surged almost 7pc since the start of
the year.

Indices in Europe have also rallied hard, with the
Cac 40 in France up 19pc since the turn of the
year and Germany's Dax, which includes reinvested
dividends, gaining more than 23pc. The S&P 500 and
the Dow Jones Industrial Average on Wall Street
have continually hit record highs over the last
two years, buoyed by the Federal Reserve's QE
programme that came to an end last October.

Investors are hopeful that central banks will
continue to underpin stock markets over the coming
months.
The latest statement from the Fed, released on
Wednesday, suggested that the central bank had
pushed out the first hike in US interest rates
since 2006 to later in the year. On the same day,
disappointing UK wage growth data indicated that
the Bank of England would also hold off raising
rates.

"The world is being flooded with currency which is
looking for a home and that home,
generally-speaking, not in hard assets or new
equipment but into financial assets where returns
are seen as better," said Jeremy Batstone-Carr,
head of research at Charles Stanley.
But while stock indices are trading at historic
levels, "there is a flip-side", he cautioned.
"Corporate profitability, rather than rising to
justify ever spiralling benchmark index levels, is
actually turning down, led by the United States.
"The further indexes press on into all-time high
territory without the earnings support, so
earnings-based valuations get stretched."
It marked the first time the FTSE 100, which was
launched in January 1984, had ever breached the
7,000 barrier, which was regarded by traders as a
psychologically important level.

Source - The Telegraph

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