London's FTSE 100 hit an all-time high on Tuesday as traders digested latest economic data and positive corporate earnings from Primark owner Associated British Foods.
ADVERTISEMENTAt the time of writing, the FTSE 100 in the UK, which measures the performance of the 100 largest companies traded on the London Stock Exchange, was up 0.32% on the day at 8,049.70 points. Earlier in the trading session it reached 8,075.68 - a fresh record for the blue-chip index.
"No sooner had the FTSE 100 hit a new record closing level, the blue-chip index has now scored another goal by achieving a new intraday high at 8,075. This positive showing is exactly what's needed to help repair the reputation of the UK stock market. It's going to be a slow process but every little helps," Russ Mould, investment director at AJ Bell, said.
"The UK has lived in the shadows of the US stock market for the past decade or more, delivering inferior returns on a relative basis as it has lacked the go-go growth stocks highly desired by investors. The FTSE's low exposure to the technology sector has diminished the index's appeal and seen investors look elsewhere for ways to turbocharge their portfolio," Mould added.
The analyst also noted how Brexit and political uncertainty have also weighed on the index, even though approximately three quarters of its constituents earn money overseas.
"That's led to cheap valuations and a mountain of unloved stocks. Investors are finally getting the message that a good chunk of these businesses still have a lot to offer, delivering slow but steady profit growth, and they're available for a fraction of the price of some of their overseas peers," Mould also noted.
Associated British Foods stock climbs to top of FTSE index
The FTSE 100 boost comes as investors digested the latest raft of economic data released in the UK - and corporate earnings, including interim results from Associated British Foods (ABS).
The company's stock jumped 9%, lifting it to the top of the FTSE 100, as it forecast "significant growth" in its full-year profit and reported a 39% jump in the first half to £951m.
"We are now benefiting from the restoration of some normality in our markets and in our supply chains," the company's chief executive, George Weston, said.
"Group profit margins are recovering accordingly to more normal levels," he added.
Richard Hunter, head of markets at Interactive Investor, commented on ABS's latest results.
"With the ravages of the pandemic now firmly in the rear-view mirror, Primark has fully regained its status as the jewel in the AB Foods crown, with the group confident that there is much more to go for.
"An unusual feature of the group is its diverse range of businesses, which allows not only for business and geographical diversification, but also for various units to pick up some of the slack elsewhere depending on the economic cycle. This was of particular benefit during the pandemic when Primark was all but shuttered, and now that the retail arm is back on track, the other units are making separate and additional progress," Hunter said.
He also noted how the share price has had a good run as prospects have improved, having added 22% over the last year as compared to a rise of 1.4% for the wider FTSE100 and up by 53% over the last two years. "The warm reaction to these numbers in early exchanges is further vindication of a well-balanced and enticing growth strategy."
Positive UK economic data
Meanwhile, positive data released in the UK will have also cheered investors on Tuesday with UK private sector activity expanding for the sixth consecutive month in April as a robust recovery in service sector output helped to offset a marginal decline in manufacturing production.
Meanwhile, output growth was supported by a solid upturn in new order volumes and a modest acceleration in staff hiring, in each case driven by the service economy.
