Energy Crisis Fuels U.K.’s FTSE 100 Index Rally to Pandemic High
Energy Crisis Fuels U.K.’s FTSE 100 Index Rally to Pandemic High
(Bloomberg) --
The U.K.’s benchmark equity index is clawing back pandemic losses, driven by a rally in mining, energy and banking stocks.
The FTSE 100 Index rose as much as 0.5% to 7,242.73 on Friday, taking it to the highest level since February 2020, when market jitters about the pandemic started to surface.
“Having underperformed for so much of the last 18 months, the FTSE 100 is now reaping the benefits of its heavy weighting of basic resources, energy and financials,” said Michael Hewson, chief market analyst at CMC Markets. A surge in metals and energy prices as well as rising yields are lifting miners, oil companies and banks higher, he said.
Royal Dutch Shell Plc and BP Plc have both soared more than 15% over the past month, with HSBC Holdings Plc and Standard Chartered Plc also among the top performers. Meanwhile, reopening beneficiaries Rolls-Royce Holdings Plc and British Airways owner IAG SA have benefited from easing travel restrictions.
Despite the recent rally, the FTSE 100 Index still trails the S&P 500, the Stoxx 600 and France’s CAC 40 this year. Hewson sees scope for the U.K. gauge to move higher, given it’s still below pre-pandemic peaks.
That’s a view echoed by Neil Wilson, chief market analyst at Markets.com, who sees potential for the FTSE 100 Index to reach 7,700 points by the end of this year, a gain of more than 6% from current levels. “U.K. shares remain heavily discounted to peers,” he said.
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