News & Analysis

FTSE 100 at 7,100 points. Big deal.

Andrew Saks, Monday, 2 August 2021

There is a whole host of superlatives brimming forth from the keyboards of analysts this morning which appear to point to the apparent stellar performance of the FTSE 100 index at the opening of the London market today.

Yes, the FTSE 100 is now back at a high point, over 7,100 points which is very high when viewed over a very long period of time, but this has been an almost stagnant norm for the past few months as large, blue-chip companies, many of which are evergreen members of the elite FTSE 100 index, have been the best performing during the last 18 months, a period during which the entire western world's economy has been turned on its head.

Much of the clamour this morning has centred on what is being vaguely defined as a rise in the FTSE 100 index as a result of 'investor confidence in a recovering global economy', but that is extremely non-specific.

This is the highest point since a week ago, but then again, last week's FTSE 100 movements were held out as relatively volatile, even though they were dipping just below the 7,000-point mark most of the time.

On July 20, £54 billion was wiped off the FTSE 100, but as this applied to combined top drawer stocks, the FTSE 100 being comprised of huge, large-cap corporations, therefore this was very quickly recouped.

Even the airlines are now optimistic despite the endless wrangling against them by the doom mongers of the state-employed think tanks, and it had been widely mooted that some of the budget airlines such as easyJet and Ryanair had been holding the FTSE 100's performance back.

Not anymore, especially given the anti-lockdown stance of the CEOs of the two companies, both publicly airing their perspectives and ramping up the flight schedules.

It would be stretching things somewhat to make such a statement that the FTSE 100 has become a sudden bastion of confidence-inspiring encouragement for investors in blue chip stock. It is more a case of an extremely buoyant set of 100 prestigious stocks which are now back at the level at which they have been for a few months, apart from last week.

One trend that has occurred over a long period of time that is absolutely noteworthy is that smaller, privately owned firms have dwindled in numbers across most Western countries, and smaller cap publicly listed stocks have also been relatively low, but the big-cap blue chip companies are as stable as ever.

This still does not equate to volatility, but it shows the clear dichotomy between the might of the big firms and the damage the lockdowns have done to the smaller ones.

Stagnation, in that case, is the overall current standing, it's just that the FTSE 100 is a very highly valued stagnant index.

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