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The FTSE 100 has reached 9,000 points for the first time in its history, as UK stocks benefit from global investors diversifying away from the US and from London’s trade deal with Washington.
The UK blue-chip stock index has outperformed both the S&P 500 and the Stoxx Europe 600 indices so far this year, having climbed 10.3 per cent.
The UK reached a partial trade agreement with the US in early May, which some analysts say has given the London market an advantage over its European peers.
“We’ve got a trade deal, of some sort or another. That gives a degree of comfort to investors,” said Neil Birrell, chief investment officer at UK investor Premier Miton.
“People are freaked out about Europe with the tariffs, so the UK is almost a ‘safe haven’ from a valuation perspective,” Birrell said.
In addition, UK stocks have benefited so far this year from investors’ greater interest in non-US assets, a trend prompted by concern about US President Donald Trump’s volatile policymaking.
Birrell added that low valuations of London-listed stocks have attracted those looking for different places to invest this year.
The FTSE 100 trades at a price-to-earnings ratio of about 17 times, compared with 27.3 for the S&P 500, according to LSEG data.
Defence stocks have been some of London’s top performers so far this year. Shares in BAE Systems have risen about 67 per cent since the start of the year, while Rolls-Royce has climbed 77 per cent.
Financial companies have also boosted the index after a strong start to the year. Shares in Lloyds Bank are up 45 per cent and Prudential has increased about 50 per cent.
However, Birrell said the UK government’s tight fiscal position remains a barrier to further growth.
“I will struggle with the UK until we’ve got some more certainty on the fiscal position,” said Birrell.
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