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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