Footsie hits record high on bumper day amid hopes US government shutdown is nearing an end

The FTSE 100 hit a record high yesterday as global stock markets soared on hopes that the US government shutdown is nearing an end.

On a bumper day for investors, London’s blue-chip index hit 9800 for the first time, allaying fears that a stock market bubble may be about to burst.

It eventually closed up 1.1 per cent, or 104.58 points, to 9787.15.

That surpassed last week’s previous record close of 9777 and fuelled hopes that the Footsie could even hit 10,000 before the end of the year.

The rally came after the Senate took a major step towards ending the longest government shutdown in US history.

The country has been in semi-paralysis for more than 40 days since the federal shutdown started on October 1 in a row over funding. But a plan is now under way to fund the government until January 30.

Rally: On a bumper day for investors, London’s blue-chip index hit 9800 for the first time, allaying fears that a stock market bubble may be about to burst

The gains in London were echoed across Europe with the main benchmark in Frankfurt up 1.7 per cent while the Paris stock market added 1.3 per cent.

In New York, the Nasdaq rose 0.8 per cent, the Dow Jones Industrial Average added 0.6 per cent and the S&P 500 gained 1.3 per cent. 

Geoffrey Yu, a senior strategist at financial services giant BNY, said: ‘It’s a relief rally irrespective of geography.’

The shutdown has weighed on the US economy since the start of the fourth-quarter and deprived the Federal Reserve and financial markets of vital data such as official jobs figures, including those due last week.

Thousands of federal workers have been furloughed – hitting everything from public buildings and national parks to air travel. 

The shutdown has coincided with concerns over a technology stock bubble – driven by enthusiasm for artificial intelligence (AI) – may be about to burst.

Neil Wilson, at broker Saxo Markets, said it had been a ‘bruising week for tech amid an AI-related crisis of confidence [that has] hobbled the broader market’. 

But he warned that the publication of missing economic data delayed by the shutdown ‘may introduce some extra volatility’.

Nigel Green, chief executive of deVere financial advisors, said: ‘Markets are looking for any excuse to buy – and after weeks of shutdown headlines and anxiety about AI and tech valuations, this breakthrough in Washington can be the catalyst.’

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