All Aboard for FTSE 7,000
LONDON -- This market just keeps on rising.
Yesterday the FTSE 100 jumped 45 points to 6,339 to register its highest level for almost five years. Today, the index has slipped 19 points to 6,320, having fallen back from the morning's high of 6,351. Still, the blue-chip index has been on a tear throughout January, with the 6,000 mark breached at the start of the year when American politicians agreed on a last-minute deal to avoid the so-called "fiscal cliff."
Since then, receding fears about the eurozone, weaker sterling, encouraging economic data from the States -- plus renewed enthusiasm for shares from us ordinary punters -- have ensured that the FTSE 100 has enjoyed its best start to a year since 1989.
In fact, the FTSE's sustained progress beyond 6,000 extends a rally that began during mid-November. The index finished Nov. 16 at 5,606 and by yesterday had surged 13% -- or 700 points -- within 11 weeks. At that rate, the FTSE 100 could hit 7,000 -- and strike a new all-time high -- sometime around mid-April.
Is FTSE 7,000 plausible? Well, going on current FTSE statistics, the blue-chip index at 7,000 would be valued at 13.7 times earnings and offer a 3.1% yield. On the face of it, those ratios do not look overly demanding. Certainly when compared to the FTSE's all-time peak of 6,930, achieved at the end of 1999 -- when the index was rated at 30 times profits -- this year would seem a much cheaper time to back the market at a fresh all-time high.
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The article All Aboard for FTSE 7,000 originally appeared on Fool.com.Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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