The London stock market closed at a record high last night and the pound hit its highest level against the dollar for more than three years.
On an upbeat day for investors, the FTSE 100 ended the session up 0.2 per cent, or 20.57 points, at 8884.92, eclipsing the previous record of 8871 set in March.
At the same time, sterling rose above $1.36 for the first time since early 2022, peaking at $1.3623 before easing.
The Footsie was caught in a global sell-off in early April as US President Donald Trump unleashed his trade war on what he described as ‘Liberation Day’.
New high: On an upbeat day for investors, the FTSE 100 rose 0.2%, or 20.57 points, at 8884.92, eclipsing the previous record of 8871 set in March
But it has risen more than 15 per cent since its lows that month as global trade tensions ease and investors hunt bargains on what is widely seen as an undervalued UK stock market.
The Footsie has now gained 8.7 per cent this year compared with a near-3 per cent rise in America’s powerhouse S&P 500.
Germany’s Dax, however, has done even better, rising 18.7 per cent as the government in Berlin announced plans to boost defence and infrastructure spending.
Neil Wilson, a strategist at London investment platform Saxo Markets, said there had been a ‘rotation in global equity markets as investors have for the first time in years questioned’ the theory ‘there is no alternative to America’.
He added: ‘Investors are looking elsewhere and consistently conversations with clients revolve around geographic diversification and reducing exposure to the US.’ The Footsie flirted with a record recently but fell short until yesterday.
Its rally came as Trump’s commerce secretary Howard Lutnick said tariff reductions agreed in last month’s US-UK trade deal would start to be seen ‘in coming days’. But the dollar weakened on fears of the impact of the trade wars on the US.
Dan Coatsworth, investment analyst at AJ Bell, said: ‘The UK stock market has been a star performer this year, delivering more than three times the return as the S&P 500 in the US. It’s been ages since the UK trumped the US on the stock market, and 2025 has been the breakthrough year.
‘The UK market has done well, but Germany has done even better thanks to the government’s plans to splash the cash on defence and infrastructure.’
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