FTSE 100 Enjoys Positive Start to Q2 Having Recaptured 8,600

The FTSE 100 index ended the first day of Q2 in positive fashion, up 0.61% having recaptured the 8,600 level.

While the immediate session offered investors some cheer, a deeper look reveals underlying pressures. The index fell back in March, shedding 3.25% of its value as markets prepared for tariffs. The drawdown came hot on the heels of the Footsie hitting all time highs in the first session of the month.

Notable gainers on the day include B&M (+5.11%), Rolls Royce (+4.06%), Barclays (+2.12%), and Rio Tinto (+1.48%), as energy went the other way. Both Shell (-0.65%), and BP (-071%) were decliners on the day, with THG and J Sainsbury laggards on the day.

From a technical analysis perspective, the index's current position warrants attention. It is presently hovering near its 50-day simple moving average (SMA), a key short-to-medium term trend indicator.

Beyond the technical charts, the fundamental health of the FTSE 100 is assessed through the collective performance and outlook of its constituent companies. Aggregate pre-tax profit forecasts for the index members for the full year 2024 were notably downgraded by 5% in the final months of last year, settling at an estimated £224.4 billion. This figure, while substantial, fell slightly short of the record set in 2022. The primary driver behind this revision was the cooling of commodity prices, which exerted downward pressure on the earnings powerhouse oil and mining sectors.

However, looking towards 2025, analysts maintain a considerably more optimistic stance. Current consensus forecasts project aggregate pre-tax income for FTSE 100 companies to surge to a new record high of £248.8 billion. This anticipated rebound signals underlying confidence in the corporate sector's ability to navigate economic challenges and boost profitability. It is crucial to note, though, that even these robust 2025 forecasts have been slightly trimmed from earlier, more bullish estimates, perhaps reflecting a degree of caution or incorporating broader macroeconomic uncertainties.

Dividends, a traditional cornerstone of the FTSE 100's appeal, remain a bright spot. Aggregate dividend payments were anticipated to reach £78.5 billion for 2024. Projections for 2025 point towards significant growth, with payouts expected to rise to £83.6 billion. This translates into an attractive forward-looking aggregate dividend yield, forecast to improve from around 3.6% for 2024 to between 3.9% and 4.0% for 2025, offering investors a substantial income stream alongside the potential for capital appreciation.