- FTSE surpasses 2018 all-time high
- Stocks riding under the radar
- Dollar strength a tailwind for FTSE
After posting its strongest start to a new year in close to a decade (up 6%), the FTSE 100 index surpassed its May 2018 all-time peak on Friday 3 February.
Perhaps surprisingly, it isn’t all about the biggest names driving returns although index heavyweight HSBC (HSBA) is up over a third since the October 2022 lows and recently surpassed its three-year high after touching 600p.
Higher interest rates have provided a tailwind for banks while a preference for value shares over growth has also been a positive influence. Earnings revisions for HSBC have increased by a fifth over the last year.
WHICH COMPANIES ARE LEADING THE CHARGE?
Iconic British luxury brand Burberry (BRBY) hit a new all-time high at the end of January as expectations of a Chinese reopening added to optimism of further growth.
At the half year stage in November, Burberry set a new medium-term sales target of £4 billion representing sustained high single-digit growth and good margin progression.
Franchised hotel group Intercontinental Hotels (IHG) made new all-time highs last week reflecting the global recovery in travel and hospitality, with revenues per available room back above pre-pandemic levels.
The company reported strong third quarter results in October with IHG’s brands increasing revenues by 12% compared with 2019 and the Americas well ahead of three years ago.
Private equity manager 3i Group (III) continued to make new highs following bumper gains in its largest holdings including European retailer Action.
Multi-brand global automotive distributer Inchcape (INCH) is making new five-year highs and closing in on the £10 all-time high made in 2007.
Earnings estimates have been revised up by over 20% in the last year and at the third quarter trading update the company upgraded full-year pre-tax profit expectations for the year to 31 December 2022 to slightly above the prior range of £350 million to £370 million.
Another high-flyer riding under the radar is industrial components company Smiths Group (SMIN) which is close to registering an all-time high.
Smiths, which makes fluid management products, industrial seals, electronic components, and security scanners delivered growth ahead of expectations and raised full year 2023 guidance in its mid-January trading update.
The company expects organic revenue growth for the year to 31 July to be ‘at least 7%’ with modest margin improvements.
A strong move higher in the US dollar following much better-than-expected US January jobs data last Friday bodes well for continued strength in the FTSE given its large US dollar earnings exposure.
