Britain’s benchmark share index, the FTSE 100 could close at an all-time high on Wednesday as UK stocks climb on their return to trading after the Christmas break.
In mid-afternoon trade, the FTSE is up by around 0.5% to trade at 7,104.3. Should it stay there for the rest of the afternoon, it would close at a new record high, surpassing the previous top of 7,103.98 points achieved in April 2015.
Here’s the FTSE’s chart as of 2.45 p.m. GMT (9.45 a.m. ET):
The day’s rally in British stocks comes as the US dollar continues to strengthen against the pound. The greenback is currently around 0.5% higher against sterling on the day.
Though a weaker pound might seem like bad news for UK stocks, about 70% of the revenue of the companies that make up the FTSE 100 is derived from abroad, meaning they make more money when sterling is weak. That is because the index is full of mining companies, oil firms, and pharmaceutical giants that use the UK as a base but tend to denominate their assets in dollars.
Essentially, when the pound does badly, the FTSE does well, as evidenced by the near 20% gain in the index since it crashed on the day after Britain’s June vote to leave the European Union.
On Wednesday, it is UK-listed mining companies leading the FTSE’s charge, with the likes of BHP Billiton, Rio Tinto, Anglo American, and gold miner Fresnillo all up more than 4% as commodity prices rise on the dollar’s strength.
Earlier on Wednesday Mike van Dulken of Accendo Markets said in an emailed market update: “The FTSE is boosted by higher oil prices supporting the commodities space, offsetting weakness among some big defensives, airlines (Airbus problems) and real estate (rates to rise and prices to fall in 2017?)”
The index has already broken its intraday high during 2016. At lunchtime on October 11,
the index hit 7,128 points, surpassing its previous intraday high of 7,123. It then slumped as the day progressed, eventually closing well below its highs.