What are the record highs of the FTSE 100?
The FTSE 100 is seen as a benchmark for the UK stock market, so record highs are often a focus for traders and investors. We’ve looked at ten of the FTSE’s historic highs and how you can gain exposure to these milestones.
The FTSE 100, commonly known as the FTSE or 'footsie', is a stock index that comprises the 100 largest companies by market capitalisation on the London Stock Exchange (LSE). The index accounts for approximately 80% of the total market capitalisation of the exchange. As such, it contains some of the most famous companies listed on the LSE – both domestic and international – such as BP, Vodafone, British American Tobacco and Coca-Cola HBC.
It is worth noting that as the index has started to include more international companies, the FTSE 250 has started to become a more accurate benchmark of the UK economy, but it remains less popular.
How is the FTSE 100 calculated?
The FTSE 100 is calculated by taking the total market capitalisation of all 100 constituents on the index, and adjusting this by the number of shares each company has available for public trading – known as free-float adjustment. This figure is then divided by the index divisor, which ensures the value of the index remains comparable with historical figures.
The FTSE calculation is:
Let’s break down each of these terms.
First, the market capitalisation of constituents. Each individual company’s market capitalisation will change throughout the day, depending on whether the share price was up or down during the day’s trading, so the value of the FTSE 100 will also fluctuate. Changes to FTSE 100 value are calculated every 15 seconds from when the LSE opens at 8:00am, to when it closes at 4:30pm. It is quoted as up or down depending on its value compared to the previous day’s close.
In order to account for capital differences between constituents – caused by a company increasing or decreasing the number of shares on the market – the calculation also takes into consideration the free-float adjustment factor. This is based on the percentage of each company’s issued shares that are available for public trading, rounded to the nearest 5%. As a result, a larger company with a higher portion of ‘floating’ shares will have a greater impact on the index’s value than smaller companies with fewer shares available for public trading.
And finally, the index divisor. Initially, this was an arbitrary number of points that was selected to fix the starting FTSE 100 value at 1000 points on 3 January 1984. But, as the composition of the index changes, so will the divisor to ensure that the index value remains comparable over time.
What is the FTSE 100’s all-time high?
As of June 2019, the all-time high for the FTSE 100 is 7877.45 points, which was reached on 22 May 2018. The previous all-time high was reached four months previously, on 12 January 2018, when the index reached 7778.64 points.
May 2018 – 7877.45 points
On 22 May 2018, the FTSE 100 reached a record high of 7877.45 points.1 This was part of a two-month long rally, which saw the index rise from a low of 6846.30 points on 22 March – an increase of more than 14%.
A major factor for the increasing value of the FTSE 100 was the depreciation of the pound, which had fallen to a low against the US dollar. GBP/USD was down to $1.3434 on 22 May, from $1.4338 the month before. This was largely due to a breakdown in the UK’s Brexit negotiations in early May, after pro-Brexit ministers demanded a hard Brexit.
While a negative sign for confidence in the Brexit talks, the decline in the value of the pound had a positive impact on the price of the blue-chip FTSE 100 constituents. If the value of sterling weakens, it means that dollar revenues are worth more when converted back into sterling. This meant any FTSE 100 companies that make their profit in dollars saw their profits boosted.
This bull run for the FTSE 100 was also part of a wider trend for global equities. The main US index, the Dow Jones, reached a record milestone of 25,000 points. This rally has largely been attributed to the easing trade tariffs tensions between the US and China.
January 2018 – 7718.64 points
During January 2018, the FTSE 100 reached two closing all-time highs, peaking on Friday 12 January at 7718.64 points. From the start of the month until the high, this was a gain of about 2.5%.
At the time, many analysts and traders attributed the bull run to the market anomaly known as the ‘January effect’. According to proponents of this anomaly, the FTSE 100 index tends to rise in January due to increased investor confidence in the new year – though this has only happened 19 times since 1984.
In 2018, the effect on the FTSE 100 waned soon after the record high, as GBP/USD started trading at its highest level since the Brexit referendum. The value of the pound had been extremely volatile since the Brexit referendum, but the strengthening currency meant that FTSE companies no longer had such an advantageous exchange rate.
December 2017 – 7687.77 points
Prior to its January surge, the FTSE 100 had finished the previous year with a record closing high. On 2017’s final day of trading, Friday 29 December, there was a final bullish pressure that sent the index up 64 points to 7687.77. This surge meant that the FTSE 100 had gained a total of 7.6% throughout the year.
The last-minute rally was led by the mining constituents. As the prices of gold and copper had risen, companies on the index saw their share prices rise in value – including Glencore, BHP Billiton and Rio Tinto.
The week before, on 21 December, the FTSE 100 had broken records by crossing the 7600-point mark for the first time in its history.
May 2017 – 7522.03 points
Earlier in 2017, the FTSE 100 smashed the 7500 record for the first time. On 16 May 2017 the index finished trading at 7522.03.
The push over this milestone was caused by hopes of a majority in UK parliament and increased infrastructure spending in China. Spending in emerging market economies usually causes a rise in commodity prices, and a boost to mining companies and energy producers. The FTSE benefitted far more than other global indices, as the S&P 500 and Dow Jones didn’t clock up corresponding record highs.
March 2017 – 7415.57 points
The FTSE 100 reached a record closing high of 7415.57 points on 16 March 2017, beating the previous high set on 1 March. The increase came after relief over a Dutch election result and an interest rate rise from the US Federal Reserve (Fed).
However, the FTSE actually closed lower than its intraday high of 7444.00 after the pound started trading higher against the dollar. The pound’s increase came after the Bank of England (BoE) announced that, unlike the Fed, they would not be raising interest rates.
January 2017 – 7292.37 points
The FTSE closed at 7292.37 points on 12 January 2017, this followed 11 record closes in a row.
Although this increase could be chalked up to the January effect, it was more likely explained by the weaker pound, higher commodity prices and various company results outperforming analysts’ expectations. In fact, the day was nicknamed ‘super Thursday’ due to all the post-Christmas earnings releases. For UK-based retailers, such as Marks & Spencer, the period saw a rise in share prices, which in turn increased the value of the FTSE 100.
March 2015 – 7022.51 points
The FTSE 100 closed above 7000 points for the first time in its history on 20 March 2015, finishing the day at 7022.51 points. The level was significant as the previous thousand mark – 6000 points – was reached 17 years previously.
Investors at the time were hopeful as central banks around the world started taking measures to boost the global economy – the European Central Bank (ECB) launched its quantitative easing programme, while the Fed suggested an interest hike and the BoE released wage growth data. The positive market atmosphere boosted British shares and so the FTSE 100 increased.
February 2015 – 6951.10 points
The FTSE 100 reached its highest level for more than 15 years on 20 December 2015, after closing at 6951.10 points.
The benchmark index broke the previous record – set at the height of the dot-com boom – amid optimism that Greece had finally secured debt-relief and a Fed interest rate hike. The index had failed to reach this record on a number of occasions during 2014, but the quantitative easing programmes laid out by the eurozone tipped the scales in favour of the FTSE 100.
December 1999 – 6930.20 points
On Thursday 30 December 1999, the FTSE 100 reached a record high of 6930.20 points. This was at the peak of the technology stocks boom.
It is worth bearing in mind that the composition of the FTSE 100 was vastly different at the peak of the dot-com boom. There were far more telecommunications, media and technology companies, many of which disappeared when the market crashed.
On the first day of 2000, the decline started, and by the end of 2001, the FTSE had fallen to 5217.40. The FTSE 100 reached a bottom of 3287.00 in March 2003 before making its way up to the record-breaking high in February 2015.
April 1998 – 6052.80 points
The FTSE 100 closed above 6000 points for the first time on 1 April 1998, when it reached 6052.80 points.
The UK economy was predicted to slump in 1998 due to the high cost of borrowing, the high value of the pound and increasingly tight fiscal policy. But the FTSE 100 gained traction in the build up to the dot-com boom. It only took eight months for the FTSE to rise from 5000 points to 6000, but as we have seen, it took another 17 years to reach the 7000 milestone.
How to trade the FTSE 100
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An index is a number that represents a group of stocks, so when you trade or invest in the FTSE 100, you cannot gain direct exposure, since there are no physical assets to buy and sell.
If you decide to invest in the FTSE 100, you could choose to buy the shares of individual companies on the index or spread your capital out across the constituents by using a FTSE 100 exchange traded fund (ETF).
If you trade the FTSE 100 instead, you’ll most likely be trading futures contracts, which are agreements to trade the FTSE 100 at a specific price on a specific date. One of the most popular ways of trading index futures is via CFDs – these are derivative products that enable you to speculate on the index future market, without buying or selling the contracts themselves. Derivatives are a popular tool as they enable traders to go long or short on the FTSE 100, profiting whichever way the index price moves.
1 London Stock Exchange, 2019
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