Despite a recent sell-off, the FTSE 100 is still trading above 10,000 points. That would have sounded unthinkable just a couple of years ago.
For me, this reflects a broader shift in global asset allocation. Capital is rotating away from high-multiple stocks priced on long-duration promises to companies generating near-term cash flows.
The Glencore re-rating signal
One old economy stock that sums up this notion of the great rotation is Glencore (LSE: GLEN). Its share price is back at its 2022 all-time highs, despite materially weaker earnings.
What stands out is not just the level of the share price, but what it implies. The market appears to be valuing Glencore less as a cyclical earnings proxy and more as a cash-generative industrial commodity business, with embedded optionality in copper and energy transition metals.
That shift matters. Even with profits well below the 2022 super-cycle peak, the company still generates strong cash flow and returns capital to shareholders. That’s exactly what the market is rewarding right now.
Coal remains the key swing factor and continues to weigh on headline profitability, particularly as prices have normalised over the past few years.
More broadly, consolidation in the sector remains a live theme, with past merger discussions involving Rio Tinto highlighting how strategic positioning in copper and other critical minerals could drive the next phase of value creation in the industry.
When banks become cash machines
HSBC (LSE: HSBA) is no longer just a ‘bank trade’. It’s a global cash engine inside the FTSE 100. Geopolitics and regional risks drive short-term volatility, but often hide a far more stable underlying story.
At its core, the bank is leveraged to a structurally higher interest rate environment. Even if central banks eventually ease policy slightly, rates remain well above the ultra-low era that defined the last decade.
That matters because it supports sustained net interest income across its global deposit base, particularly in Asia where much of its earnings power is concentrated.
In simple terms, HSBC doesn’t need rates to rise — it benefits from them staying ‘normalised’ rather than collapsing back to zero.
On top of that sits a clear capital return story. A dividend yield of 4.6%, supported by ongoing buybacks, positions the stock less as a traditional growth bank and more as a yield compounder.
Risks remain, particularly around global growth and geopolitical shocks. But these tend to affect sentiment more than long-term earnings power.
The bigger picture is that the market is re-rating HSBC as a high-yield, structurally supported cash flow business.
Bottom line
What stands out to me is that the FTSE 100 is being re-rated in plain sight. Investors are shifting away from long-duration growth stories and towards businesses delivering cash today. Miners and banks are no longer being priced as purely cyclical — but as cash-generative assets with real return potential.
In that context, I think both Glencore and HSBC are worth a closer look at current levels, given their ability to generate strong cash flow and return capital through the cycle, even in more uncertain macro conditions.
If that shift continues, this may be less of a short-term trade and more of a structural rotation. For me, that suggests the FTSE 100 still has further to run.
