The FTSE 100 has ended a long wait to achieve a new record high.
The index, which comprises the 100 most valuable companies on the London Stock Exchange, closed Monday’s session on 8,023 points following a jump of 128 points or 1.6%.
That was the highest closing sum since February last yearwhen the 8,000 barrier was breached for the first time in its history.
The previous record stood at 8,012.
The performance on Monday was driven by a strong showing for companies across the board, particularly financial and consumer-linked stocks such as those for retailers.
The index has been gaining ground in recent weeks on growing hopes for a cut in UK interest rates as inflation eases – with strong evidence that the economy has turned a corner after the recession during the second half of last year.
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Analysts credited the push for a new high on two main factors; confidence that a major escalation in the Middle East conflict will be avoided and a weakening in the value of the pound against the US dollar.
Sterling is trading at five-month lows against the greenback at just $1.23 and was half a cent down on the day.
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This is a consequence of dollar strength as opposed to pound weakness as expectations are growing across the Atlantic that the Federal Reserve’s expected interest rate cuts are further down the track than had been predicted.
Higher interest rates tend to be supportive of a currency which, in this case, is the world’s reserve currency.
A weaker pound helps FTSE 100 constituent companies which make money in the United States.
That is because it boosts their bottom line when those dollar earnings are booked back in the UK and converted back to pounds.
The FTSE has largely lagged growth among its rivals since Brexit and was tamed by a succession of economic shocks but has been reclaiming some ground this year due to perceived low valuations versus competing stocks overseas.
Its lack of technology companies – which have tended to perform best globally since the pandemic – has been another factor behind the FTSE’s malaise.
Trading hubs also point to a competitive disadvantage through a 0.5% transaction tax on share purchases in UK firms.
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AJ Bell investment director Russ Mould is asked if the weaker pound has contributed to Monday’s record high for the FTSE 100.
The index traditionally struggles during times of world economic uncertainty as its 100 constituents are dominated by firms whose fortunes are directly linked to demand for basic commodities such as mining and industrial stocks.
However, the signs of growth starting to emerge are a positive, not only for the FTSE 100 but also pension pots.
The broader and more domestically-focused FTSE 250 is yet to climb back above the 20,000 points level but it saw gains of 1% on Monday.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said of the prospects ahead: “With growth in the UK not shooting the lights out, and inflationary pressures showing signs of easing, there is still optimism around about the prospect of interest rate cuts coming later in the summer, which appears to have helped the FTSE 100 climb higher.
“As lower borrowing costs are forecast later this year, amid a slightly more positive outlook for the economy, housebuilders have also headed sharply higher amid hopes that stronger demand will return for new homes.
“Ocado, J Sainsbury, Next, Marks and Spencer and Tesco have also been lifted amid hopes for more clement conditions for consumers.
“A handful of FTSE 100 listed companies, which breached record levels earlier in the month, are on course to climb back up to those highs, such as Rolls Royce and BAE Systems. Aerospace stocks have been pushed higher by ongoing conflicts and post-pandemic demand.”
A former top Post Office lawyer has been accused of telling the Horizon IT inquiry a “big fat lie” over his knowledge of a bug in the system that could have stopped wrongful prosecutions of sub-postmasters in their tracks.
Jarnail Singh was a senior in-house lawyer and subsequently head of criminal law at the Post Office from 2012.
The inquiry into the Horizon scandal heard he was copied into an email containing a report which identified the glitch in the accounting system but denied knowledge of it for years – despite saving the document and printing it out.
Mr Singh denied the claims by Jason Beer KC, counsel to the inquiry.
Mr Beer said the report was sent to Mr Singh just three days before sub-postmaster Seema Misra’s case began in October 2010.
Ms Misra was eight weeks pregnant when she was handed a 15-month prison sentence after being accused of stealing £74,000 from her branch in West Byfleet, Surrey.
Her conviction was later quashed by the Court of Appeal.
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Sub-postmistress wrongly jailed while pregnant
Mr Singh said he “wasn’t made aware” of the report, written by Fujitsu engineer Gareth Jenkins.
Explanation of bug
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Mr Beer said it described a bug “that will result in a receipts payment mismatch” and offered an explanation for apparent cases of theft among sub-postmasters.
He added that a file address on the bottom of the document, which included Mr Singh’s name, showed the lawyer had both saved the report to his drive and printed it out only nine minutes later.
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Ex-Post Office exec accused of lying
He said this proved Mr Singh had lied years later when he denied having advance knowledge of the issues uncovered by a 2013 report carried out by forensic accounting firm Second Sight.
Mr Singh said he also did not know how to save or print documents during his employment at the organisation and had to ask others to do it for him.
Mr Beer accused Mr Singh of telling “a big fat lie” to the inquiry and of having failed to disclose important information to the defence or court ahead of Ms Misra’s prosecution, asking: “You’d known about the bug all along hadn’t you, Mr Singh?”
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‘I have had breakdowns’
The lawyer responded: “No, that’s not true.”
Admission of mistakes
He also denied any suggestion of a cover up but admitted that “mistakes were made” in the prosecution of Ms Misra.
Mr Singh said: “I’m ever so sorry Ms Misra had suffered and I am ever so embarrassed to be here, that we made those mistakes and put somebody’s liberty at stake and the loss she suffered and the damage caused which was not what this was about.”
Following her case, hundreds of people were later wrongly convicted of stealing after bugs and errors in the accounting system, operated by Fujitsu, made it appear as though money was missing at their branches.
There were more than 700 convictions in total, dating back from 1995 to 2015.
Victims not only faced prison but financial ruin. Others were ostracised by their communities, while some took their own lives.
Fresh attention was brought to the scandal after ITV broadcast the drama Mr Bates Vs The Post Office, prompting government action that aims to speed up the clearing of names and payments of compensation.
Official figures have raised fears of a deepening public sector drag on the the UK’s economic recovery from recession.
Data from the Office for National Statistics (ONS) showed that productivity in the public sector, dominated by education and healthcare, deteriorated between the third and fourth quarters of 2023.
It measured a 1.0% decline over the period, leaving the figure 2.3% lower than a year ago and even further away from recovering pre-pandemic levels.
Public sector productivity measures the volume of services delivered against the volume of inputs – like salaries and government funding – that are needed to maintain those services.
While the sector has witnessed hits from the impacts of strikes since the end of the COVID crisis, the NHS has struggled to deal with a worsening backlog in many key waiting lists.
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Rows over funding have been exacerbated by record levels of long-term sickness.
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UK’s economy has ‘turned corner’
The official jobless rate stands at just over 4% – around 1.4 million people.
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However, the numbers judged to be economically inactive due to poor health are nearing double that sum.
The Office for Budget Responsibility has estimated that the issue has added around £16bn to annual government borrowing bills.
Pressures have been reflected in ONS data, with output in both the health and education sectors falling during the fourth quarter of the year – contributing to the country’s recession.
That was despite rising inputs over the period.
Back in March, chancellor Jeremy Hunt used his budget to announce a Public Sector Productivity Plan – with an emphasis on improving technology in the National Health Service (NHS).
Figures next week are widely expected to confirm the end of the recession, with overall output returning to growth during the first quarter of the year.
Recent private sector surveys have painted a rosy picture for the dominant services sector, which accounts for almost 80% of overall output, despite continued pressure on budgets from the impact of higher inflation and interest rates to help cure the price problem.
Tech giant Apple has recorded the biggest drop in iPhone sales since the early months of the COVID pandemic.
Sales for January to March were down 10% on the same period last year – something not seen since the 2020 iPhone model was delayed due to lockdown factory closures.
Overall, Apple earned $90.8bn (£72.4bn) in the latest quarter – down 4% from last year. It was the fifth consecutive three-month period that the company’s revenue dipped from the previous year.
Apple’s profit in the past quarter was $23.64bn (£18.85bn) – a 2% dip from last year.
It was good news, however, for the overall value of the company as its share price rose nearly 7% after investors had expected a bigger drop in sales.
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March: Apple accused of locking out rivals
Meanwhile, Apple chief executive Tim Cook has discussed how the company is set to use artificial intelligence (AI).
While rival Samsung introduced phones that can feature AI, including generative AI chatbots, Apple has yet to announce how it will be embedded into its iPhones.
The next iPhone is expected to feature AI microchips and bigger screens.
Applewill reveal the newest software when it holds its annual developers’ conference in June.
Generative AI could power phones to write software code, essays or create images based on a prompt by users.
Mr Cook said the company feels “very bullish about our opportunity in generative AI and we’re making significant investments”, adding: “We’re looking forward to sharing some very exciting things.”