THE FTSE 100 has climbed to its highest point since before lockdown in March today – the first full trading day since the post-Brexit deal.
Shares leapt by 2.58% to 6,670 this morning in its first day of trading since the agreement was reached on Christmas Eve between the UK and the EU.
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This means the FTSE is at its highest level since the close on March 6 of 6,463, which is just after markets started to get spooked over Covid-19.
The first national lockdown was then announced on March 23.
At the time of writing at 2.05pm, the FTSE was 2.15% higher at 6,641.
The footsie index tracks the performance of the UK’s 100 biggest companies, but the FTSE 250 has also risen today – up by 2.4%.
How the FTSE 100 falling affects your personal finances
FALLS in the stock market can affect your finances in a number of ways, here we explain how.
Pensions – If you save cash into a pension scheme where the provider invests your money, you’ll likely see the value of your pension drop when the FTSE 100 falls.
But keep in mind that with retirement savings, you’re investing for the long-term so the drop in value isn’t likely to be permanent.
Instead, you’ll see your retirement savings grow again once the stock market recovers.
Savings and mortgages – There is no direct link between the stock market and your mortgage or savings accounts.
But if panic on the stock market spreads to the wider economy, the Bank of England may cut interest rates. Interest rates are currently held at 0.1%.
This means your mortgage is likely to get cheaper, while savers will suffer from lower interest rates.
We’ve explained how the interest rate cut will affect your finances here.
Sterling – The value of the pound often rises if the FTSE 100 falls.
This is because many of the firms on the index earns a significant amount of cash in the US.
But again, exchange rates are also volatile and there are many factors that make them rise and fall.
As markets closed for the festive break just hours after the Brexit deal was announced last week, today marks the first full trading day since the news.
The markets have also likely been boosted by news of vaccine rollouts, as the most vulnerable in the UK continue to receive the jabs.
Shares in pharmaceutical firm AstraZeneca soared today, which follows news that its vaccine is expected to gain UK approval in the coming days.
Meanwhile, banking shares continued to tumble due to ongoing concerns over the pandemic’s impact on the economy.
The four biggest fallers in the FTSE today were Lloyds, Barclays, HSBC and Natwest, with Lloyds shares dropping 4%.
Yet Russ Mould, investment director at AJ Bell, said the markets seem to be “welcoming the Brexit deal”.
He added: “However, the agreement struck between London and Brussels is yet to win universal acclaim, even if that is the inevitable result of the compromises that the Prime Minister had to make.
“A double-dip recession, thanks to new viral strains and perhaps more stringent lockdowns, could put equity investors on the back foot.
“Even if the FTSE 100 is down by a sixth from its August 2018 and January 2020 highs, the index is up by 30% from its March 2020 nadir of 4,994, so some degree of recovery is already expected.
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“A successful vaccination programme could unleash animal spirits in the form of corporate investment and increased private consumption, leading to a rapid economic bounce back, especially now some of the Brexit uncertainty is lifting.”
In mid-November, the FTSE 100 climbed to its highest point in five months after a second Covid vaccine was found to be 94.5% effective.
And the week before, the markets jumped 5.5% following the news from Pfizer that their Covid-19 vaccine trial worked better than expected.
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