U.K.’s FTSE 100 scaling fresh highs despite cost of living crisis

London — Britain faces Weakest growth prospects A catalog of G-7 countries and the cost of living pressures that are putting the poorest at risk and putting significant strain on the budgets of middle-income households.

At the same time, investor money has never been poured into the UK’s largest company.of FTSE100 The Index kicked off last Friday and reached new highs in Wednesday and Thursday’s sessions, breaking three intraday records last week.

It also comes from the end of a year in a market dominated by pessimism, with risk assets being sold and pan-European indices falling. Stocks 600 to the United States S&P 500 To the SSE Composite startup in Shanghai that was hurt.

The recent rise in the FTSE 100 shows that not only has it occurred despite severe cost-of-living pressures, but it is also related to them.

energy companies such as shell and blood pressure offal Report record profits and promised higher shareholder dividends, boosting the stock price ( call A higher windfall tax to support consumers suffering from higher bills does little to undermine their attractiveness).

The FTSE climbed to an all-time high of 7,944 points at midday in London on Thursday. Standard Charteredis one of many banks whose profits have surged as a result of rising interest rates.

Meanwhile, strong performances in commodity stocks were boosted by rising prices, supply constraints and the prospect of a recent Covid-19 reopening in China, which pushed the index higher.

“The UK’s FTSE 100 is not about the UK’s domestic economy,” said Janet Mui, head of market analysis at RBC Brewin Dolphin, noting that more than 80% of companies’ corporate earnings exposure comes from abroad. .

Mui told CNBC that a combination of factors contributed to the index’s all-time high. pound plunge Support their overseas income (collected in dollars). Energy, commodities and financials are heavily weighted. And so is the relatively strong performance of consumer products defensive he staples. Unilever — and healthcare — etc. AstraZeneca.

The UK stock market has been frequently criticized for its lack of hot new tech companies and its predominance of staunch proponents of the ‘old economy’.

The wider FTSE 250 has a stronger domestic link, but 50% of revenue is still going abroad, Mui added.

Susanna Streeter, senior investment and market analyst at Hargreaves Lansdowne, said the rise in FTSE was in line with economic conditions, with homebuilder Barratt reporting a “slight rise” in bookings for new homes. She said it could be explained by seeing a glimmer of hope.She also pointed to positive signals that Europe would avoid a recession and ease its energy crisis.

She pointed out that even if the banks’ net profit margins improved, they would still perform better if their bad debts weren’t dealt with.

Factors weighing heavily on the British public include: interest rate rise increased borrowing costs, Grocery price inflation At 16.7%, the highest ever, overall inflation More than 10.

a report A paper released Wednesday by the UK’s National Institute for Economic and Social Research argued that the UK was likely to avoid a technological recession this year, although growth would be near zero, while one in four households You won’t be able to pay your utility bills and food bills enough. A middle-income household with the most disposable income could reduce him by £4,000 ($4,873).

And the separation between a rising stock market and a dire outlook still haunts many households.

“It is cruel that campaigners representing up to seven million low-income people in the UK were asking the government to increase the support offered to them on a day when the FTSE 100 index hit a record high. It’s a big paradox: their utility bills,” Richard Murphy, a professor at the University of Sheffield’s School of Business, told CNBC.

In March, the UK government will end the extensive home utility compensation program that has been in place over the winter. This comes at a time when many governments are trying to scale back their financial support to keep public spending down.Recently, the European Central Bank claiming By continuing to maintain the aid package, you run the risk of sustaining inflation.

But without help, bills still remain high, Murphy said, “many people can’t make a living and end up hungry, cold and even homeless.” Let’s go,” he said.

“It’s like the Victorian era when the country is so divided by income and wealth,” Murphy said.