FTSE 100 Hits Record Amid Weaker Pound and Defence Boost
The FTSE 100 in Britain reached a record high, benefiting from a weaker pound and gains in defence stocks. Despite looming fiscal challenges and potential tax hikes, the quarter's performance was strong. Midcap stocks had smaller gains, and global sentiment remains uncertain with possible U.S. government shutdown.
The FTSE 100 reached a record high on Tuesday, marking its strongest quarterly performance since October 2022. A weaker pound, bolstering export-driven earnings, and a boost from defence stocks like Melrose and Rolls-Royce, each gaining over 2% after UBS raised price targets, contributed significantly to the index's success.
Michael Brown, senior research strategist at Pepperstone, noted the combined impact of a marginally weaker pound over recent weeks and the FTSE 100's attractiveness due to low valuations compared to its peers. Yet, the precarious UK fiscal situation, which had pressured gilts and the pound, along with domestic challenges for midcap stocks, impacted broader market sentiment.
Upcoming fiscal hurdles loom, with tax hikes anticipated in November's budget aimed at addressing public financial deficits. In the corporate world, Evoke and ASOS faced downturns due to policy uncertainty and weak demand, while global concerns, including a looming U.S. government shutdown, add to the cautious outlook.
(With inputs from agencies.)
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