Five factors to explain FTSE 100’s record high despite recession
London’s blue-chip share index, the FTSE 100, hit a new all-time high at over 8,000 points on Thursday.
But why is the FTSE 100 so strong, when the UK economy is expected to fall into recession this year and so many businesses and households are struggling? Five factors have helped the share index outperform other global markets since the start of last year.
The jump in oil and gas prices after Putin’s invasion of Ukraine a year ago has buoyed the profits and share prices of the FTSE 100’s two oil giants.
Shares in Shell have gained almost 60% since the start of last year, from £16.22 in January 2022 to more than £25 today, making Shell the most valuable member of the index, at £179bn, matching AstraZeneca.
Shares in BP have climbed by almost two-thirds since the start of 2022, from 330p to 555p today.
Both companies have reported record profits for last year, with BP more than doubling its earnings to $28bn (£23bn), and Shell making annual profits of $40bn in 2022, up from the $19bn in 2021.
The biggest FTSE riser on Thursday was British Gas owner Centrica, after it reported a tripling of annual profits to a record £3.3bn for 2022.
Bumper profits at energy companies have angered campaigners who are calling for tougher windfall taxes.
The FTSE 100 tracks the 100 largest companies listed in London, and its largest members are multinationals whose sales and profits come from around the world.
Companies in the FTSE 100 derive approximately 75% of their revenues from overseas. The fortunes of banking giant HSBC (the third most valuable company on the index, worth £122bn) or Unilever (number four, at £107bn) depend on the global economy, rather than just the UK.
Hopes for the global recovery have risen this year, as wholesale energy
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