FTSE 100 hits record high; UK strike disruption highest since 2011 – business live | Business

After a morning of gains, the FTSE 100 index is trading around 7981 points as the clocks chime noon in the City, up 0.45% or 34 points.

That leaves the index firmly on track for a new alltime closing high today, after it hit a new intraday high of 7996 points this morning.

Investors will be watching the latest US inflation report, in 90 minutes, to see if price pressures have eased. If so, shares could be lifted higher still, perhaps to the heights of 8,000 points for the first time….

Rob Morgan, chief investment analyst at Charles Stanley points out that the FTSE 100 has underperformed other indices over the last 20 years, but it has a good track record of returning dividends to shareholders.

“Over the past two decades, the UK’s FTSE 100 index has been a poor performer compared with most other markets. The index, representing the 100 largest stock market-listed UK companies, is a mere 25% higher than at the turn of the millennium.

“Admittedly, this represents an unflattering starting point. The index was puffed up by unsustainable valuations of ‘TMT’ stocks during the dotcom bubble in the late 1990s. Yet it has been a clear laggard against the US or emerging markets where investors have comfortably trebled their money – in capital growth terms alone.

“Where the FTSE has stood out, and consequently generated respectable returns, is dividends – the profits declared by companies and paid to shareholders. Reinvesting these for growth has boosted returns substantially, and the old fashioned values of seeking out sustainable and growing pay outs from shares could finally nudge it over the line to its next milestone: 8,000 points.”

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Holiday group TUI has given travel stocks a lift today, by telling shareholders it is seeing encouraging booking trends for summer and next winter.

TUI reported that it carried 3.3m customers in the final quarter of 2022 – an increase of one million versus the prior year, and 93% of the number just before the pandemic in October-December 2019.

Booking volumes overall in the last four weeks are now above pre-pandemic at higher prices, TUI said:

The start into the new year has seen significant booking momentum with record booking days online in both the UK and Germany.

Shares in TUI are up 1.7% this morning, on the FTSE 250 index of medium-sized companies. EasyJet have gained 4.4% and Wizz Air are up 2.1%.

Concerns among investors of a global recession have ‘melted away’, according to a survey of European fund managers.

Bank of America reports that a net 24% of those fund managers polled think the global economy will go into a recession over the next twelve months. That’s down from 51% last month and a peak of 77% in November.

This easing of recession worries has helped to push up stock markets this year.

BofA says:

Whereas 61% of investors still think European growth will slow in response to tightening credit conditions (down from 70% last month), a growing share of 33% expects growth to be resilient thanks to savings and order backlogs (up from 16%). 33% see resilient US growth in the near term before a slowdown due to monetary tightening (up from 25%).

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There were 1,671 company insolvencies across England and Wales last month, new figures from the Insolvency Service show.

That’s a 7% increase year-on-year, and 11% more than in January 2020 – just before the pandemic hit.

But it’s a decline on December, when 1,964 firms collapsed.

There were 189 compulsory liquidations in January 2023, which is 52% more than in January 2022.

Compulsory liquidations have increased from historical lows seen during the coronavirus (COVID-19) pandemic, partly as a result of an increase in winding-up petitions presented by HMRC, the Insolvency Service says.

There were also 1,382 Creditors’ Voluntary Liquidations, in which a company which can’t pay its debts decides to put itself into liquidation.

Business insolvencies rose through 2022 as costs soared, the economy stumbled, and pandemic-related government support ended.

Ed Macnamara, head of restructuring at PwC’s Restructuring and Forensics practice, warns of a ‘domino effect’ as companies struggle to pay their bills:

While the number of company insolvencies in January is down on the month before, any respite is likely to be short-lived. The data, which shows a 7% rise on the year before, serves as a reminder that we are still in the midst of a difficult trading environment with rising interest rates and high inflation which, when combined, generally results in more company failures.

We’re also seeing an uptick in both late payments and the number of requests to extend credit terms. In the construction sector for example, clients have flagged a significant increase in new customer accounts being opened as companies try to spread their credit risk across the market. In addition, many subcontractors are reporting that they’re unable to pay for products because they haven’t been paid either. This domino effect is likely to increase the squeeze on businesses already struggling with their debts and might mean that some are forced into insolvency.

The GMB union has spotted that the number of UK workers on zero hours contracts has hit a record high.

Today’s labour market report shows there were 1,133,441 people employed on a zero hours contract in October to December 2022. That’s up from 1.034m in the final quarter of 2021, and the highest on record.

The GMB says Rishi Sunak is presiding over a ‘tidal wave’ of insecure work.

Younger people (those 16-24), and those in the hospitality industry, are more likely than other workers to be on zero-hours contracts.

Gary Smith, GMB general secretary, said:

This government is making history for all the wrong reasons.

Rishi Sunak is presiding over a tidal wave of insecure work and exploitative zero-hours employment is higher than ever.

The economy is stalling and his answer is to launch a bonfire of workers’ rights while other countries get with ending these contracts for good.

Zero-hours contracts are a key part of a broken employment model in sectors from social care to retail. It’s time for a government that will fight for workers’ rights.

The pound has rallied this morning, after this morning’s labour market statistics showed a rise in wages in the last quarter.

Sterling has gained half a cent against the US dollar to $1.219.

The 6.7% rise in regular pay (excluding bonuses) over the last year could potentially spur the Bank of England to raise interest rate again, perhaps from 4% to 4.25% at its next meeting, in March.

“It might be stretching things to say love is in the air when it comes to the stock market, but the FTSE 100 is mounting a Valentine’s Day push toward the 8,000 level,” says AJ Bell investment director Russ Mould.

All eyes will be fixed on Washington later as the US Bureau of Labor Statistics posts inflation numbers for January.

The expectation is for another modest easing of inflationary pressures and anything more than this could provide a real boost to sentiment – though conversely a renewed move higher in the inflation rate could prompt heavy selling.

In the UK record wage growth raised concerns the UK’s own inflation problems might prove stickier than feared ahead of the UK posting its own CPI numbers on Wednesday.

However, the Bank of England will likely be hoping the lagged impact of a series of rate increases is yet to fully come through amid growing expectations a rate hike in March will be the last.

FTSE 100’s strength doesn’t reflect UK economy’s performance

The FTSE 100 is closing in on the 8,000-point mark for the first time.

The index has just climbed to 7,996, an all-time high.

It’s all about today’s inflation data from the US [at 1.30pm UK time], says Neil Wilson of Markets.com.

Core inflation is expected to decline to 5.4% from 5.7%, up +0.4% month on month, with the headline print down to +6.2%. For all the talk of disinflation, price growth remains way too high.

The market is going to realise that a peak inflation is leading to more of a plateau not a sharp march down.

The FTSE 100 pushed up to a fresh record high, nudging closer to the magic 8,000 level, as risk remained bid following a positive start to the week ahead of today’s all-important US inflation data.

European equity markets were broadly higher after Wall Street closed up more than 1% and stocks in Asia were mainly higher.

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FTSE 100 hits record high, with 8,000 points in view

UK real wages should start rising in the second half of this year, predicts Simon French, chief economist at Panmure Gordon, as inflation falls.