There we have it after a previous attempt in October 2007 and numerous efforts in 2014, fifteen years since the all-time high was recorded by the FTSE 100, today has seen the index close at levels that it has never seen before.
The FTSE 100 has been lagging its peers but now it has finally cracked the nut. The fact that the US’s Dow Jones achieved this feat as far back as Q1 of 2013 and Germany’s Dax shortly after in the same year, shows just how far behind the UK’s benchmark has been when compared to other global indices. Investors exposed too heavily to UK blue chips have simply not seen as impressive returns in the past two years and there’s little to suggest that now we are above and beyond that all-time record high, things are about to get much better.
Equity investors have been riding the wave of cheap money, fuelled by unconventional monetary policies pursued by the world’s central banks which have allowed this bull market to extend well beyond the duration of your average length of a bull market. Many argue that it’s got further to go with the ECB recently entering the ring with their own QE program, but the higher markets go, the harder they fall. Investors face considerable headwinds in the months ahead and it’s not only the odd geopolitical event that has the potential to throw a spanner in the works.
The UK General Election with its uncertain outcome is just one hurdle investors will have to negotiate, but bigger risks lurk beyond the UK’s shores that threaten to pull the rug from underneath this rally. External factors such as a rapidly slowing Chinese economy and a US economy that has recently been showing signs of fatigue are not to be underestimated, coupled with the fact that the recent US earnings season disappointed. The ECB may just be starting its QE program in earnest, but the Federal Reserve and Bank of England aren’t too far away from starting to tighten monetary policy.
This does not mean that we won’t see the figure “7” in front of the index before long, but it looks as though the best gains have been made and further upside could be limited.