They say that the FTSE 100 is more a measure of the global economy and the FTSE 250 a reflection of UK plc. If that is right, then there was good news indeed on the UK yesterday.
The FTSE 250 closed at 18,379.63 yesterday, the last time it finished the day at that level was, err, never. It was a record.
Of course, it was not alone. The FTSE 100 has closed at a record high for eight days in a row, the last time it managed that was in 1997, when a chap called Tony Blair became Prime Minister.
The surge in the UK stock markets coincided with falls in sterling. At the time of writing, 10th January 7am, there are 1.1509 euros to the pound, from 1.1934 back on December 15th. Against the dollar, it has fallen from $1.2750 (5th December) to $1.2174.
There is a curiosity.
Some liken the value of the pound to the UK plc’s share price. Others say the stock market is the true share price for the UK, and maybe the FTSE 250 is the measure we really need to focus on – as the FTSE 100 is largely made up of multinationals, and does not correlate so well with the UK economy.
If that is so, then it is curious how one share price – the pound is so low, the other, the FTSE 250 is at a record high.
It is just another example of the contradictions we are seeing everywhere we look in this post-Brexit era. Maybe we should not blame politicians for sounding so contradictory when even the economic data and the markets seem to be at odds.
As a general rule, the FTSE 100’s performance is more reliant on the shape of the global economy and commodity prices. A lot of the big oil companies and miners sit near the top of the FTSE 100. So, when the oil price rises, as it has been doing in recent months, the FTSE 100 tends to rise. When sterling falls, overseas earnings of multinational companies seem higher, once converted into pounds.
That then explains the good fortunes of the FTSE 100.
But why did the FTSE 250 hit a record?
The index does count multinational companies and oil companies in its number – Tullow oil, for example.
But the beginning of 2017, also saw purchasing managers’ indexes surge, pointing to a nice pick-up in UK growth at the end of last year.
This has not done any harm, either.
The FTSE 250 has just done it the once, one record so far – compared to the FTSE 100 which is just one day from a triple hat-trick of records. The big question for 2017 is, can the FTSE 250 also put in more records?