The FTSE 100 is a stock market index comprising the 100 companies with the highest market capitalization on the London Stock Exchange. It serves as a barometer of the largest London-listed blue-chip companies. However, given that a solid portion of the revenues of these companies comes from outside of the UK (over four-fifths of the sales according to LSEG), it is tough to use the index as a measure for the UK economy.
Latest Price, Chart & Dividend Yield
While for many years, the FTSE 100 saw a significant lack of movement to the upside, mostly trading sideways, the index has picked up some steam so far in 2024.
Similarly to the S&P 500 and the Federal Reserve, expected Bank of England Rate cuts would provide a further boost to the FTSE 100.
Dividend Yield: 3.55%
UK Listed Daily Movers
Various Ways To Trade The ‘Footsie’
The FTSE 100 index is most commonly traded in the UK, but the global interest in the Footsie remains strong.
For those with shorter-term horizons, the ‘Footsie’ is most commonly traded via leveraged products such as futures, options, or CFDs. You cannot buy the FTSE 100 index as you would a direct stock, with ETFs remaining the most popular investment angle for those with long-term durations in mind.
The majority of the process involved in accessing indices is similar regardless of where in the world you are, but there are some nuances on a country level. Account types, tax treatment, or local regulations playing the biggest differentiator between global access to the market, with CFDs not an authorised product in US markets as one notable example.
As you can see from the ETFs listed here, there are a couple that are ‘short’ the index, and trade inverse to the FTSE 100, with or without leverage.
FTSE 100 Price Forecast
The FTSE 100 is a bellwether for the London Stock Exchange, reflecting the performance of its largest companies. However, it is the subject of much debate. Here are the bull and bear arguments for the index.
The Bull Argument: In a July note to clients, analysts at Goldman Sachs said that while they are neutral across the primary equity regions, they favour UK equities, including the FTSE 100 and FTSE 250. This stance is based on potential political tailwinds for domestic growth and the FTSE 100’s ability as a hedge for US elections.
The Bear Argument: While there is currently some bullishness, investors should be aware that the London Stock Exchange has been in somewhat of a rut, with some companies moving listings elsewhere and potential IPOs choosing other exchanges to list on. This is obviously a negative for the FTSE 100. For example, names such as Shell are considering switching their London listing to New York. In addition, an activist hedge fund recently called on Rio Tinto to change its primary listing from the London Stock Exchange to the Australian Stock Exchange (ASX).
Analyst Targets
- HSBC: 8,750
- IG Group: 8,300
- Chelsea Financial Services: 9,000
- AJ Bell: 8,300
- Deutsche Bank: 8,800
- Societe Generale: 7,400
- Barclays: 8,100
Source: Motley Fool, Trusnet
FTSE 100 Top 10 Companies
Companies across various sectors, from banking and energy to consumer goods and pharmaceuticals, make up the FTSE 100. As such, it is a benchmark for investment performance and a popular choice for index-based investment strategies, especially dividend-focused ones, given the current makeup of the index.
The FTSE 100 constituents are reviewed quarterly.
| Company | Market Cap (As of July 29, 2024) |
|---|---|
| AstraZeneca | £188.21 Billion |
| Shell | £175.06 Billion |
| HSBC | £124.42 Billion |
| Unilever | £117.56 Billion |
| Rio Tinto | £82.08 Billion |
| BP | £75.28 Billion |
| RELX | £67.29 Billion |
| GSK | £63.14 Billion |
| British American Tobacco | £60.43 Billion |
| Diageo | £57.10 Billion |
Top 5 Constituents
Why Buy into the FTSE 100
The FTSE 100 offers exposure to the UK’s largest companies, but it’s essential to understand who might benefit from investing in it. In addition, it is important to understand if you are the type of investor that will prefer investing in the FTSE 100. Here are the investors best suited to buying the FTSE 100:
Dividend Investors: The FTSE 100 has historically been a strong source of dividend income. Many of its constituents are mature companies with stable cash flows, allowing them to consistently return profits to shareholders.
UK Economy and LSE Believers: Investors who are optimistic about the UK’s economic prospects and, more importantly, the prospect for the London Stock Exchange may find the FTSE 100 an attractive investment option.
Diversification Seekers: While the FTSE 100 is focused on the UK, it includes companies operating globally, providing some diversification benefits.
Passive Investors: Index funds tracking the FTSE 100 offer a low-cost way to gain exposure to the index for those who prefer a hands-off approach.
Currency-Hedged Investors: Given the significant proportion of FTSE 100 companies earning revenue in foreign currencies, investors concerned about exchange rate fluctuations might consider currency-hedged FTSE 100 funds.
Indices – Daily Movers