The FTSE 100 is up the most this year as the stock market continues to hit new record highs

The FTSE 100 hit a record high of 8,393 earlier this week, after rising more than 9 percent since the start of 2024.

That was the twelfth new closing peak for Britain’s leading stock market index in a month, equaling a record dating back to 1984.

While investors will be cheered by a 9.3 per cent return in mid-May, some FTSE 100 shares have grown much more – with the top three up 49 per cent, 42 per cent and 39 per cent respectively.

We reveal the ten biggest gainers in the FTSE 100 this year and look at why these big blue chip companies have taken the lead in the UK stock market.

Highest gainers: NatWest Group is the best-performing blue chip share so far this year, followed by aerospace giant Rolls-Royce and fellow banking firm Barclays

Why are stocks rising?

The FTSE 100’s latest set of record highs has come from renewed eexpectations of impending interest rate cuts.

Although the Bank of England did not cut Britain’s base rate last week, the 7-2 vote to keep it and boss Andrew Bailey’s dove-like tone encouraged financial markets to predict it will cut rates this summer, taking them to 4. will bring 75 percent. year.

Lower base interest rates tend to stimulate stock markets by encouraging business investment and consumer spending rather than savings and debt payments.

Conversely, bank stocks have benefited from the higher interest rate environment as borrowers have to pay more for loans and mortgages.

The ‘Footsie’ also benefits from the depreciation of the pound against the dollar, as companies in the index tend to have significant foreign profits that are worth more when converted back into sterling.

But as Victoria Scholar, head of investments at Interactive Investor, notes: ‘The index is not a barometer of the strength of the UK economy; rather, it is an outward-looking index composed largely of multinational conglomerates.”

She adds that the Footsie will get a substantial boost from defense and aerospace stocks, which are high on geopolitical instability and bigger military budgets.

Here are the ten best performing blue chip stocks so far this year, with data correct as of May 15, 2024.

After a ‘debanking scandal’ involving former UKIP leader Nigel Farage rocked NatWest last year, the financial services company roared back.

In February the company announced that pre-tax profits rose by a fifth to £6.2 billion in 2023, its best performance since the global financial crisis and around £200 million above analyst expectations.

Like other commercial banks, NatWest has benefited from the BoE raising interest rates even more in response to high inflation.

And although the first quarter results showed a significant drop in profits, profits of £1.33 billion still exceeded expectations.

These results come as the British government prepares to sell its outstanding stake in NatWest, having already reduced its stake by around 11 percentage points to below 27 percent since January.

Will Howlett, financial analyst at Quilter Cheviot, said: ‘While this provides an overhang to the share price, it can also be seen as a clearing event and could reduce any additional political or regulatory interference in the short term, which will be viewed by investors welcomed. .’

Under the leadership of CEO ‘Turbo Tufan’ Erginbilgic, Rolls-Royce’s annual profits have more than doubled and cash flow has risen to record levels.

The continued recovery in air travel has boosted demand for the company’s engines and services, with the likes of Turkish Airlines and Air India placing huge orders last year.

Recovery: Thanks to a turnaround led by CEO Tufan Erginbilgic (pictured), Rolls-Royce's annual profits have more than doubled

Recovery: Thanks to a turnaround led by CEO Tufan Erginbilgic (pictured), Rolls-Royce’s annual profits have more than doubled

At the same time, defense activities have boomed as conflicts in Ukraine and the Middle East and the possibility of China invading Taiwan have prompted countries to increase military spending.

Rolls-Royce is a major winner of the AUKUS safety partnership, with an agreement to build power units for Britain’s nuclear submarines.

According to the International Air Transport Association, global defense spending is expected to rise in the coming years as a result of these conflicts, while demand for air travel is expected to double by 2040.

Both factors offer an optimistic long-term outlook for Rolls-Royce, whose shares have already more than quadrupled since the Turkish-born CEO took over in January 2023.

Although most recent annual profits were lower, Barclays’ pledge to return £10 billion to investors by 2026 and restructure to save £2 billion in costs resonated with shareholders.

The company delivered on this promise with a forecast profit of £2.3 billion in the first quarter, despite lower mortgages, customer deposits and corporate deals.

Investors have accused Barclays of being too reliant on its investment banking arm, a criticism exacerbated by the decline in mergers and acquisitions due to higher interest rates.

Rewards: Barclays' pledge to hand over £10bn to investors and restructure to save £2bn in costs by 2026 welcomed by shareholders

Rewards: Barclays’ pledge to hand over £10bn to investors and restructure to save £2bn in costs by 2026 welcomed by shareholders

Still, Russ Mould, investment director at AJ Bell, says the size of this division “could help drive a sustainable recovery and revival” in the struggling UK stock market.

He adds: “A rising market could increase interest and boost trading volumes, primary and secondary issuance and M&A activity.

“All this could earn the investment bank higher fees and boost its traditionally cyclical profits.”

Here’s an overview of the remaining top ten:

4. Antofagasta (36.3/5) – Demand for copper is boosting the Anglo-Chilean company, which plans to increase production of the key energy transition metal in 2024 despite falling mineral prices.

5. Intermediate capital group (33.3%)A new entry into the FTSE 100, the private equity manager continued to see assets under management grow, reaching $86.3 billion at the end of December.

6. Anglo-American (33.2%) – The mining group’s share price has soared since receiving a mega £31 billion bid – subsequently increased to £34 billion – from BHP, its much bigger Australian rival.

7. Beazley (29.6%) – In February, the insurance company raised its full-year profit forecast and announced plans to distribute another $300 million to shareholders.

8. GSK (25%) – The pharmaceutical giant raised its annual profit forecast after first-quarter sales rose 10 percent to £7.4 billion.

9. BAE systems (22.7%) – Amid heightened global tensions, orders continued to flow for the defense giant, reaching a record £70bn in 2023.

10. 3i group (22.5%) – The ex-owner of Agent Provocateur has achieved good returns thanks to the rapid growth at the Dutch discount chain Action, in which it has a majority stake.

Some links in this article may be affiliate links. If you click on it, we may earn a small commission. That helps us fund This Is Money and keep it free to use. We do not write articles to promote products. We do not allow a commercial relationship to compromise our editorial independence.

Leave a Reply

Your email address will not be published. Required fields are marked *