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FTSE 100 hits another record high on back of strong company earnings and takeover reports

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The FTSE 100 stock index sets a record amid robust earnings reports and takeover talk in the banking sector as investors send signals that they believe global inflation may have already reached its peak. 

The FTSE 100 index of the largest companies listed on the London Stock Exchange rose 0.7% to a record 7,943.68 today as experts signal that a recession in Britain could be avoided (though it may still feel like one to many consumers). It hit a previous high only yesterday.

Among the blue-chip companies whose shares surged after releasing earnings forecasts for the coming year was pharmaceutical giant AstraZeneca. Also rising was Unilever, which reported better than expected growth in sales.

What’s behind the climb?

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said the FTSE gained “as winds of worry over how far interest rates will go are blown away again.

“The defensive, international nature of the index has provided the seeds of growth, but an improved forecast for the UK economy this week is also adding fresh nutrients. There are hopes the forecasts could see fresh confidence emerge from consumers and limit the expected belt-tightening.”

Meanwhile, takeover talk seemed to be behind one of the biggest increases.

Overseas interests

Standard Chartered soared 9.0% after Bloomberg reported that First Abu Dhabi Bank was aiming to expand its global footprint with an all-cash offer of at least $30bn to take over the UK-based multinational bank.

Russ Mould, investment director at AJ Bell, said that if such a takeover were successful, “it would represent yet another UK stock acquired by a foreign player. It would also play to the theory that industry players are more likely to buy UK-listed companies than private equity in the current environment.

“Whereas the sharp rise in the cost of debt has made life harder for private equity to do leveraged deals, a lot of businesses have come out of the pandemic in a robust financial shape and have plenty of cash on their books to buy rivals in their respective sectors.”

Commodities climb

Victoria Scholar, head of investment at Interactive Investor, pointed to a robust performance this week by other markets in Europe, including the DAX in Germany. 

“Precious metals are staging gains with silver, gold and platinum trading higher,” she added. “Gold is up for the fourth straight session despite risk-on sentiment, lifted by weakness for the US dollar against most major currencies.”