The FTSE 100's blistering 11-month rally

London's blue-chip stock exchange has been on the up-and-up for the last 11 months in a row. That's the longest rally in its 29-year history. Did someone say recession?

by Michael Northcott
Last Updated: 19 Aug 2013

If you’ve had shares in a decent spread of top-ranking companies for the last year or so, then you’ve probably had rather a good time of it. The FTSE 100 was up by an average of 0.3% in the month of April, which marked the 11th month in a row that the index has risen. That breaks the record of 10-month growth periods seen in the mid-eighties and mid-nineties.

Against a backdrop of dipping in and out of recession, it’s hard at first to guess why the FTSE is doing so well. The main factor is historically low interest rates. Putting your money in a bank at the moment is a sure-fire way of losing money, since interest rates are a couple of percentage points below inflation. 

A couple of influences which should help the rally to continue are plans from the European Central Bank to cut rates to 0.5% in the eurozone on Thursday; the billions of pounds of quantitative easing about to take effect in Japan (which is likely to mean investors flee Japanese companies to preserve the value of their cash); and the fact that a raft of major companies listed in London have been beating City expectations.

So if you’ve got any cash lying around that you want to put somewhere safe, the FTSE 100 should remain a pretty good choice for the time being…

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