The FTSE 100 notched up its longest run of record highs on Tuesday as another low for sterling helped the UK’s blue-chip index outperform European peers.
The main London benchmark added 0.5 per cent, up 37.7 points to 7,275.47. It was the FTSE’s ninth consecutive record-high close as well as its 11th consecutive gain, a winning streak it has only equalled three times — in 1997, 2004 and 2009.
The pound’s decline since the UK’s vote to leave the EU has bolstered the country’s stock market, making exports more competitive and flattering the earnings of companies that book revenue in foreign currencies.
If priced in dollars the FTSE has been underperforming most global indices, having fallen 6 per cent since the Brexit vote result, and sits 25 per cent below a dollar-denominated record high reached in 2014.
Currency traders have renewed selling the pound this week on fears that Theresa May is leading Britain to an uncertain future outside the single market.
At around $1.2160 to the dollar, the pound sits just above its closing low of $1.2117 from October reached in the aftermath of the sterling flash crash.
Tuesday’s FTSE gains were paced by the dollar-reliant mining sector with Anglo American up 7.2 per cent to £12.38. Metals prices rose in response to Chinese factory gate inflation data.
Kaz Minerals took on 7.2 per cent to 414.3p after Canaccord added the miner to its “buy” list. A rising copper price and sector-leading production growth in 2017 should take the stress off Kaz’s balance sheet, Canaccord said.
Whitbread, the Premier Inn and Costa Coffee owner, took on 4.8 per cent to £40.51 after Credit Suisse said the shares “have rarely been this cheap”, in spite of signs that demand has been picking up. UK hotels are enjoying their strongest trading for two years, it said.
Car insurers were left behind with Direct Line down 3 per cent to 357p and Admiral off 2.6 per cent to £17.80, amid concerns about a potential jump in injury claims costs.
JPMorgan Cazenove highlighted that the Ministry of Justice has until the end of January to complete a review of how upfront lump-sum settlements are calculated in personal injury cases.
The current interest rate to calculate present value, known as the Ogden rate, was set in 2001 at 2.5 per cent.
A 1 per cent reduction could result in settlement costs rising by as much as 20 per cent, JPMorgan warned.
Admiral looks particularly at risk, the broker said, as it has a high proportion of younger drivers and uses high trigger points at which underwriting would cover individual claims costs.