What happened
The FTSE 100, the index of Britain 100 largest listed companies, climbed 131 points, or 1.24 percent, to close at 10,716.97 on Wednesday, its strongest showing among major Western European benchmarks. Over the past month it touched an intraday peak of 10,747, a fresh record.
The rally cooled only slightly on Thursday, when the index eased 0.15 percent to around 10,701, holding on to the bulk of its gains. For an index that spent years lagging behind Wall Street, the move marks a striking turn.
Analysts pointed to a revival of international investor interest in London-listed shares, drawn by reasonable valuations, generous dividend yields and the resilience the index has shown through a year of geopolitical turbulence.
The FTSE 100 is packed with energy majors, banks and miners, companies that earn most of their money abroad, which helps explain its strength even as the wider UK economy grows only slowly.
Why it matters
The FTSE 100 is the headline barometer of corporate Britain, and its level ripples far beyond City trading desks. Most workplace pensions and a large share of stocks and shares ISAs hold FTSE 100 companies, so when the index rises, so does the value of millions of retirement pots.
A strong, record-testing market also signals confidence. It suggests global investors see UK-listed firms as good value after years of being overlooked in favour of American technology giants.
Because so many FTSE 100 firms earn in dollars and euros, the index can rise even when the domestic economy feels sluggish. That disconnect is worth remembering: a booming FTSE does not automatically mean a booming Britain.
Still, higher share prices support company pension schemes, boost the confidence of savers, and can make it cheaper for big firms to raise money for investment.
Explained simply
Think of the FTSE 100 as the scoreboard for the biggest players in the British corporate league. This month the home team has been on a winning streak, and the scoreboard is flirting with an all time high.
An index is simply a basket of shares bundled together to track how a market is doing. The FTSE 100 follows the hundred most valuable companies listed in London, so when it goes up, it means those companies are, on average, worth more than they were.
You do not have to be a stock picker to benefit. If you pay into a pension or hold a FTSE 100 tracker fund, you already own a slice of that basket, and its rise quietly adds to the value of your savings.
What is driving the climb is a change of heart among global investors. For years they poured money into US tech and shunned the older, steadier UK firms. Now, tempted by cheaper prices and chunky dividends, some of that money is flowing back to London, lifting the whole index.
What it means for you
If you hold a workplace or private pension, the odds are good that some of your money sits in FTSE 100 shares, so this rally has nudged the value of your pot higher, even if you have done nothing at all.
For anyone with a stocks and shares ISA tracking the FTSE 100, the past month has delivered solid gains, with the index up strongly from its lows. A low-cost FTSE 100 tracker fund remains one of the simplest ways for ordinary savers to own a piece of this market.
Income seekers have particular reason to smile. FTSE 100 companies are known for paying generous dividends, and the index yield remains attractive compared with cash savings, offering a stream of income on top of any rise in share prices.
A word of caution: records can be followed by pullbacks, so this is not a reason to pile in all at once. Steady, regular investing into a diversified fund is usually wiser than chasing an index at its peak.
The bigger picture
The FTSE 100 first cleared 10,000 points earlier in this cycle, a milestone that once seemed distant. Pushing towards 10,750 shows how far sentiment towards UK shares has shifted in a relatively short time.
The open question is whether the rally has legs. Much depends on the oil price, global interest rates and whether international investors keep rotating money back into unloved UK stocks.
Keep an eye on how the index handles the 10,750 level, and on the Bank of England decision on 30 July, since interest rate expectations remain a powerful driver of where shares go next.