The FTSE 100 closed at a record high on Monday after a 1.6% rise, or 128.02 points, to close at 8,023.87.
That's nearly 10-points more than its previous high, recorded in February 2023, when it closed at 8014.31.
It comes as the Bank of England is expected to cut interest rates earlier than planned, after deputy governor Sir Dave Ramsden said inflation was on course to decline and stabilise at 2% this year.
The London-based index's latest rally means it's risen nearly 4% since January, the latest upturn led by retailers such as Marks and Spencer and Tesco.
Analysts have credited the new-high on two main factors; expectations that conflict in the Middle East would escalate have not been met, while the value of the pound has weakened against the US dollar.
Sterling is trading at a five-month low against the dollar, at just $1.23.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said of the prospects ahead: "With growth in the UK not shooting the lights out, and inflationary pressures showing signs of easing, there is still optimism around about the prospect of interest rate cuts coming later in the summer, which appears to have helped the FTSE 100 climb higher.
"As lower borrowing costs are forecast later this year, amid a slightly more positive outlook for the economy, housebuilders have also headed sharply higher amid hopes that stronger demand will return for new homes.
"Ocado, J Sainsbury, Next, Marks and Spencer and Tesco have also been lifted amid hopes for more clement conditions for consumers.
"A handful of FTSE 100 listed companies, which breached record levels earlier in the month, are on course to climb back up to those highs, such as Rolls Royce and BAE Systems. Aerospace stocks have been pushed higher by ongoing conflicts and post-pandemic demand."
FTSE 100
The UK's flagship share index, the FTSE 100, was up 47-points at 8,071 shortly after opening this morning.
Brent crude oil futures were up 0.40%, trading at $87.35 a barrel.
Companies reporting today
- Anglo American - Q1 Production Volume
- Associated British Foods - Half Year Results
- Baker Hughes - Q1 Results
- Ferrexpo - Q1 Production Volume
- PepsiCo - Q1 Results
- Taylor Wimpey - Trading Statement
- Tesla - Q1 Results
- Visa - Q2 Results