Time for cautious optimism, not FTSE jubilation

What comfort can we draw from the FTSE 100 Index’s all-time high of 7905 last Friday? Yes, in a limited sense, it’s a reason to be cheerful: first, because it’s a boost to the value of pension and tracker funds; second, because it fits the current narrative of gloom receding, in which inflation has probably peaked, interest rates look set to follow soon and the Bank of England says the coming recession will be shallower than first thought.

But the new top is less than a thousand points above the ‘dotcom bubble’ record of 6930 at the turn of the millennium, so no spectacular reward for long-term equity holders. And blue-chip share prices tell us little about domestic prospects, because four-fifths of FTSE 100 companies’ revenues come from overseas and look all the more significant when the pound is as low as it now stands, even in post-Kwasi recovery. The 100 Index also contains a clutch of global energy giants that have made out like carbon bandits (£32 billion annual profits for Shell, £23 billion for BP) from price spikes in oil, gas and coal.