Last night, the FTSE 100 broke through the 8,000 level – a “psychological milestone”, according to Russ Mould, investment director at AJ Bell.

However, he explained that much of the success of the UK stock market over the last year can be traced back to Russia’s invasion of Ukraine.

He said: “This helped buoy the share prices of the oil and gas sector, and the financial sector too, as the fight against increased inflation has meant interest rates have also had to rise, boosting bank reserves. A weak pound has also helped propel the Footsie upwards, thanks to all the overseas earnings made by the companies within it.”

Elsewhere, the threat of recession is “already priced in”, while lower oil prices, a mild winter and the energy bills support are “helping take some of the pressure off consumers” as wages rise.

Mould also suggested that the FTSE 100 climb is down to hopes that the inflation rate has peaked and will continue to fall. This in turn could lead to the Bank of England pivoting from rate rises to rate cuts. This all adds to the optimism for investors and the markets.

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Health of UK stock market

When looking back at the last time the FTSE 100 broke through a milestone threshold (7,000), this was almost eight years ago, while the climb from 6,000 to 7,000 took almost 17 years, according to Mould.

He added that while the FTSE 100 index is the most widely used barometer of the health of the UK stock market, it doesn’t include dividends “which are a key component of investor returns”, and it also excludes medium and smaller companies that trade on the UK stock market.

 

Further rise on back of big results

The FTSE 100 rose another 0.4% this morning to 8,032 which Mould said is “refreshing”.

“Helping to drive the index on Thursday was Relx, up 3.2% after its full-year results were well received. Despite being one of the UK market’s biggest companies, Relx tends to stay out of the spotlight,” Mould said.

Meanwhile, Centrica, the parent company of British Gas which is the UK’s largest energy supplier posted record annual profit today of £3.3bn – this is triple the figure posted in the previous year.