FTSE 100 prediction: Where the United Kingdom's market will reach in the coming years?
A forecast of where the FTSE 100 is headed
The FTSE 100 Index (FTSE or FTSE 100) is an acronym for the Financial Times Stock Exchange 100 Index. It represents the top 100 firms' stock index as per the market capitalisation listed on the London Stock Exchange. Moreover, the index gauges the performance and reflects the prosperity of popular companies regulated by the United Kingdom company law. The central authority maintaining this index is the FTSE group, a subsidiary of LSEG or the London Stock Exchange Group.
The UK 100 Index showed a sad growth during the pandemic months. However, the satisfactory news about COVID 19 vaccine development sighed relief in the United Kingdom's market. It pushed the value of FTSE 100 to about 19.5 per cent in November 2020. The Brexit agreement with the European Union and the selloff in January acted as a catalyst to this surge. With this, the index increased by 2.7 per cent.
So will the FTSE 100 rise further in
2021? Where it will reach in the coming years. The reported deal with the
factors pushing the UK market, the FTSE 100 potential and the performance
forecast for 2021, 2022 and 2023.
The FTSE 100 forecast for 2021: Where the index will reach?
As per some financial critics, if the United Kingdom's economy successfully recovers from the disturbance due to carnage COVID 19, the FTSE 100 will show a sharp surge. One of the UK situated consultancy with the name Capital Economics presented its views in the UK 100 outlook. They said that the economy would recover fuller and faster in 2021. The Chancellor will not make a compact fiscal plan. The Bank of England will stay away from the negative interest rate, and the economic fallout will not be as severe as people anticipate if there is a no-Brexit.
The USB investment bank analysts think that the UK market is being undervalued but has an immense potential to surge this year. They support this argument by adding that they keep their preference for the United Kingdom financial market. This market operates on around a twenty per cent discount to the worldwide stocks on the twelve months trailing P/E ratio still provides around a forty per cent earning surge in 2021 on their forecasts. They further recommend traders to take a broad approach to the United Kingdom stocks as internal market shifts could be larger.
The critics further added that financials might also register a further surge, notwithstanding the rally since November, on declined interests around a larger hit to the Gross Domestic Products. Moreover, they said that financials' valuation remains alluring, and earnings growth has come on track. As per their prediction, the oil or energy industry has enormous potential and is expected to reach a mark of $60 per barrel for Brent crude by the closing year 2021.
For the domestic stock, it is expected that they may outperform or surpass the global stocks because of their larger sensitivity to the United States Gross Domestic Product. At the same time, the sterling strength will negatively influence overseas earnings.
For the end of the year 2021, UBS has about 7,200 points of the FTSE 100 as it anticipates that United Kingdom firms' valuations will grow from twenty-year lows. Analyst of USB also predicts that the pound will continue to surge along with the equity market. Thus by attaining 1.44 against the United States dollar by the end of 2021. Professional at HSBC investment bank also presents positive views about the FTSE 100 this year.
The year 2021 will prove better for dividends too. Last year was a shocker for both economy and dividends. About fifty firms in the FTSE 100 index cancelled, cut and suspended their payouts. The condition will improve this year, and we can find more stability in the index concerning the income front. You must have heard or seen that various big companies in the FTSE 100 have already announced that they will resume payouts.
Others will follow the same soon. Inspiring the ban on bank dividends was lifted by the Bank of England, which clearly reflects that the banks such as Barclays and Lloyds will continue their payouts in 2021. It is also notable to point out that several dividend payouts by the FTSE 100 firms may not be as easy and good as they used to be. Several firms are supposed to utilise the disorder as a chance to meet their payouts. In all, the dividend payments are expected to be significantly high compared to the last year.
In contrast to these positive predictions, there are those which also keep a negative view about the FTSE 100 surge. Trading Economics, the data platform, says that this index will decrease in 2021. The UK100 forecast reflects that the financial market will decline to 6,625.04 points by closing the first financial quarter and further showing a sharp decline to 6,246.70 points in 12 months. In addition to this, many think that FTSE 100 will not show strong price growth as expected by some analysts.
They provide a strong reason for
this. They say that FTSE 100 consists of numerous large companies facing huge
challenges and striving to provide any development at the moment. The example
of such companies includes BT Group, Vodafone and Royal Dutch Shell. These
kinds of firms' performance have pulled down the index in recent years, and it
is expected that the same will continue in 2021 and beyond.
FTSE 100 forecast by months for the year 2022 and 2023
Here is the table presenting the monthly FTSE 100 forecast by some analysts for 2022 and 2023.
The Final call
The report presented the views of different analysts about the Financial Times Stock Exchange 100 Index. What do you think will the UK 100 price go down or up in 2021? Whatever may be the price shift in the market, you should always be vigilant while trading as an investor. A smart trader knows how to snatch profit from adverse market conditions.One popular way to profit from the Financial Times Stock Exchange 100 Index's price variation is to trade it with contracts for difference or CFDs at T1Markets. CFD trading allows traders to take advantage in both directions. You can either take a long position if you think that the index price will surge, or you can go short if you feel that the index price will decline.