The FTSE 100 enjoyed its 10th straight record close on Wednesday, breaking the stock market’s record (which has only stood for one day) for consecutive closing highs.
The blue-chip index closed up 0.23%, or 16.78 points on Wednesday, at 7,292.25 points.
This means the FTSE has never been so high and has also beaten its previous best run of consecutive record closes — another new record.
It may sound pretty spectacular, but the FTSE’s streak — which started on December 28 — has largely been dull. The index has crawled higher, never gaining more than 1% in any of the ten record-breaking days.
The streak has been part of a huge rally from the index since Britain voted to leave the EU on June 23 last year. It has rebounded more than 22% from its post-vote low on June 27, the Monday after the referendum.
It has been hailed by many of those who supported Brexit as a positive sign for the UK after the vote. However, what has driven the surge has not been any great jump in confidence in the British economy, but instead the surge has been down to the pound’s unprecedented crash since the vote.
Generally speaking, when the pound goes down, the FTSE rises. That is because it is chocked full of miners, oil firms, and pharmaceutical giants, with 70% of all revenues for companies on the index derived from abroad, meaning that a weak pound makes them more profitable.
The chart below, from JP Morgan Asset Management’s latest “Guide to the Markets” in 2017, illustrates in the simplest terms just how striking the correlation between a rising FTSE and the falling pound has been in the last year (note that the pound’s axis is inverted):