FTSE 100 breaks new ground: Glass half empty or half full?

On Tuesday afternoon, the FTSE 100 index set a new all-time high, hitting 8,015.65 points, surpassing the previous record closing level of 8,014 set in February 2023.

Given the multiple, complex challenges the UK capital markets face, this new record stands out as a somewhat rare piece of positive news. For the optimist, you could see it as a potential bellwether that indicates more positive change is yet to come.

Analysts noted the growth was primarily driven by crude, energy, and defence stocks, helped along by a good dose of optimism about potentially lower interest rates on the horizon.

The pessimistic view, however, when looked at in a global context, is that the FTSE 100’s growth seems rather snail-like when compared to the likes of the Nasdaq or S&P 500. It has taken nearly thirty years for the FTSE 100 to climb from 7,000 to 8,000 basis points, an increase of 14 per cent. During that same time, the Nasdaq grew by circa 220 per cent and the S&P 500 by 230 per cent.

The slow growth can likely be attributed to why there has been little fanfare on the FTSE 100 breaking new ground. Instead of a bellwether for more positive change to come, it better serves as a reminder of the work that still needs to be done to make the UK capital markets an attractive option again for companies.

With a concerted effort involving policymakers, investors, and companies, the UK can turn around its current fortunes and accelerate growth right across the capital markets.

Whether one views the situation with optimism or pessimism, we can all agree that growth is a good thing. It's a sign of progress and potential for the future. Additionally, the slower growth, when compared to other major indexes, may indicate there is still relatively good value to be found here in the UK.