Unlock the Editor’s Digest at no cost
Roula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.
The FTSE 100 has reached 9,000 factors for the primary time, as UK shares profit from international traders diversifying away from the US amid uncertainty over President Donald Trump’s commerce warfare.
The UK blue-chip inventory index has outperformed the S&P 500 and the Stoxx Europe 600 indices to this point this 12 months, having climbed 10.3 per cent.
UK shares have benefited this 12 months from larger investor curiosity in non-US property, a pattern prompted by concern about Trump’s unstable policymaking.
“It’s place to cover,” mentioned Emmanuel Cau, head of European fairness technique at Barclays.
The UK reached a partial commerce settlement with the US in early Might, which some analysts say has given the London market a bonus over its European friends.
“So long as we’ve this tariff overhang, the FTSE 100 must be doing nicely . . . in comparison with indices on the continent being capped by tariff uncertainty and euro power,” Cau mentioned.
Low valuations of London-listed shares have additionally attracted these searching for totally different locations to speculate this 12 months.
The FTSE 100 trades at a price-to-earnings ratio of about 17 occasions, in contrast with 27.3 for the S&P 500, in accordance with LSEG information.
“Persons are freaked out about Europe with the tariffs, so the UK is nearly a ‘protected haven’ from a valuation perspective,” mentioned Neil Birrell, chief funding officer at UK investor Premier Miton, including that the UK’s commerce settlement “offers a level of consolation to traders”.
Cau mentioned the FTSE 100 was “largely benefiting from power in a number of huge sectors”, together with mining, telecoms, financials and utilities.
Defence shares have been a few of London’s prime performers to this point this 12 months. Shares in BAE Methods have risen about 65 per cent for the reason that begin of the 12 months, whereas Rolls-Royce has climbed 75 per cent.
Monetary corporations have additionally boosted the index after a robust begin to the 12 months. Shares in Lloyds Financial institution are up about 41 per cent and Prudential has elevated about 47 per cent.
Nevertheless, traders mentioned the UK authorities’s tight fiscal place stays a barrier to additional progress.
“I’ll battle with the UK till we’ve acquired some extra certainty on the fiscal place,” mentioned Birrell.
Barclays’ Cau mentioned “if we see a correct bond market strop” concerning the UK’s fiscal place, then “there is perhaps a ‘promote UK’ second”.
