UK Stocks Hit An All-Time Record High

UK Stocks Hit An All-Time Record High
Jonathan Hobbs, CFA

about 1 year ago1 min

The UK’s FTSE 100 Index – which tracks Britain’s 100 biggest stocks – entered uncharted territory on Wednesday, hitting a new all-time high. The index rose to 7,934 points in morning trading, eclipsing its previous daily high of 7,903, set in 2018. It’s good news for UK investors: the index has underperformed its global rivals over the past 20 years, but with it now breaking above its highest-ever level, there’s technically a better chance of it trending even higher over time.

There’s an old saying in investing: “show me an all-time high and I’ll show you a buy”. That’s because a new high can increase the chance of a “blue sky breakout”. Still, what tends to happen, more often than not, is an asset’s price pulls back a bit first after making a new high, before then trending up – and in doing so, it punishes the breakout traders. So if you think this is indeed the start of a bigger bull run for UK stocks, you might want to wait for a pullback before you buy in – that is, if risk management is your thing.

As for why UK stocks are up – some will say it's because recession and inflation fears have eased. After all, the Bank of England is now predicting a shallower but less intense recession. But remember, the market is forward-looking: what happens today is often what it was already pricing in yesterday.

A simple way to get exposure to UK stocks is through the iShares Core FTSE 100 UCITS ETF (ticker: ISF; expense ratio: 0.07%), which has a dividend yield of around 3.5%. Luke wrote more about the UK corporate investment picture, here.

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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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