FSTE 100 sets record high; 20 Tory rebel MPs threaten Sunak’s majority

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London’s FTSE 100 stock index set a record closing high on Friday (Feb 3) finishing up more than 1% at 7,901.8 points – beating the previous record set in May, 2018 when the FTSE 100 closed at 7,877.45.

Investors are reportedly backing the UK’s blue chip firms to benefit from the weak pound combined with a growing belief that global financial pressures are easing.

Soaring inflation caused by energy price rises following Russia’s invasion of Ukraine may be lessening alongside the slowing of interest rate hikes by central banks.

A report by the BBC states the FTSE 100 record “follows years of the UK lagging other big financial markets”, and adds: “But the shares have benefited from a weaker pound.”

FTSE 100 record is all about ‘how and where’ it makes money

Darshini David, the BBC’s economic correspondent explains it is where and how the FTSE 100 companies make their money “that counts.”

The bulk of it is from overseas. When the dollar rises against the pound, their overseas earnings automatically rises. Furthermore, the weak pound – which is down around 11% against the dollar over the last 12 months (currently at $1.21) – makes companies listed on the index ever more attractive compared to dollar or euro-listed companies.

The FTSE 100 index of the most valuable 100 companies listed on the London stock exchange, is dominated by banking and energy companies. One of its biggest risers on Friday was Shell. Shares in the energy company rose 3.3% on the back of Thursday’s announcement by Shell of record profits for 2022, totalling £33 billion ($40bn).

While the FTSE 100 set a new high, the FTSE 250 index  is yet to reach the record set in 2021.

Sunak’s majority threatened by 20 rebel Tory MPs

Elsewhere, the Telegraph reports that the government has been warned by its chief whip that it can no longer rely on the support of 20 of its backbench MPs.

It effectively means the 80 seat majority – won under disgraced former PM Boris Johnson in 2019 – is now less than 60 (following by-elections and MPs losing the party whip).

In turn, that means fewer than 30 Tory MPs rebelling will defeat the government in Commons’ votes.

According to the Telegraph, the “low bar” helps explain Rishi Sunak’s willingness to amend plans and legislation “in the face of relatively low-key rebellions” rather than testing his majority.

Sunak has been in No 10 for just over 100 days but has already U-turned on several policies, including planning reform and onshore windfarms. In his first week as prime minister, Sunak backtracked over going to Cop27 in Egypt and then reappointed Suella Braverman as home secretary, just six days after she was sacked by then PM Liz Truss for breaching the ministerial code.

Labour leader Sir Keir Starmer has repeatedly called the prime minister “weak” and this warning to Sunak about the 20 rebel MPs will give the opposition even more ammunition to use against the government.

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