The UK100 – or Financial Times Stock Exchange (FTSE) 100 – is one of the most popular stock market indices in the world for traders. The liquidity and volatility of the UK100 index allows it to present traders with dynamic opportunities for speculating on the UK100 price with contracts for difference (CFDs), without owning any underlying assets.
What is the UK100 index?
The UK100 index is a capitalisation-weighted share index that comprises 100 companies listed on the London Stock Exchange with the largest full market value. Founded in 1984, the UK100 index has since superseded the FT30 index as the foremost benchmark of UK equity.
For traders, the UK100 index can provide an insight into the health of the wider UK economy – representing around 80% of the value of the UK market on the London Stock Exchange. There is also an intricate relationship between the UK100/GBP for prospective traders to be aware of.
How does the UK100 index work?
Trading on the UK100 index is open on week days between 8am until closing values are issued at 4.30pm. During these hours, the index is calculated in real time and updated every second – making it an extremely liquid market index in which traders can long or short their position(s).
With many of the listed companies earning from overseas business/operations, the UK100/GBP relationship is often inverted. If GBP sterling weakens on the currency markets, the UK100 can often strengthen due to the increased profitability of revenues earned overseas e.g. in USD.
What drives the UK100 price?
Factors that can impact and drive the UK100 price are varied, and can include:
− The weightings of individual companies listed on the UK100 index
− UK economic performance, as well as other closely aligned economies e.g. eurozone
− UK government fiscal policy
− Bank of England interest rates and inflation reports
The real-time UK100 chart on this page can provide prospective and current traders with the ability to spot existing trends in this fluid stock market – and opportunities for strengthening their position. Updated to reflect the most current UK100 conditions, this chart should not be used as a guarantee for future performance – but is available to traders around the world.
UK 100: Q1 2021 Outlook
The UK 100 or FTSE 100 has declined by around 14% year to date. However, in the last three months, this blue-chip index has gained almost 12%. Despite the recent ramp up, British equities have lagged other major stock markets. Analysts believe British stock will catch up in 2021.
The Brexit trade deal being signed between the UK and the EU removes a four-an-a-half year uncertainty overhang on British stocks. However, once the UK exits the bloc on December 31, the new trade deal will come into force and there could be ups and downs as the two regions adjust to the new norms. Progress in the rollout of vaccines will give the British economy the right backdrop to make a strong economic rebound in 2021, giving a major lift to the UK 100.
Economic Data to Watch Out for in Q1 2021
January 8, 2021/ February 5, 2021/ March 5, 2021: US Non-Farm Payroll Report
The US NFP is one of the most important reports that causes volatility in markets around the world. The US has been reporting a slowdown in jobs growth in recent months, and the growth is likely to decelerate further in the coming period, especially due to a record surge in covid-19 cases. The market expects an addition of just 190,000 jobs in December.
January 15, 2021/ February 10, 2021/ March 12, 2021: UK GDP Growth
The British economy reported a contraction for the eighth straight month, shrinking 8.2% year-over-year in October due to lower economic activity amid the pandemic. Analysts are expecting a further decline in the UK’s GDP due to the imposition of stricter restrictions to contain the spread of the new variant of the virus. GDP is likely to contract 16% in November.
January 15, 2021/ February 10, 2021/ March 12, 2021: UK Balance of Trade
In October, the UK reported its first trade deficit since March, recording a gap of £1.74 billion versus a surplus of £0.61 billion in the earlier month. Exports declined 3.6% to £47.99 billion due to lower shipments of goods, while imports rose 1.2% to £49.72 billion. The deficit is expected to ease to £1.2 billion in November.
January 20, 2021/ February 17, 2021/ March 24, 2021: UK Inflation Rate
Consumer prices in Britain rose 0.3% year-over-year in November, down from 0.7% in October. The biggest upward contribution came from games, toys, and hobbies during the month. For December, the annualised inflation rate is likely to increase to 0.5%.
February 4, 2021/ March 18, 2021: Bank of England Interest Rate Decision
The Bank of England announced plans to hold interest rates at a record low of 0.1%, and to maintain its bond buying at £875 billion. However, the UK’s central bank is expected to lower interest rates in view of the new strain of the covid-19 virus and the significant rise in infections. The lower interest rate environment will support the UK 100 index.
Q1 2021 Predictions: Political Events That Could Impact the UK 100
Even with the Brexit trade deal signed, there will be significant pressure on the UK government to approve a referendum on Scotland’s independence, especially with the Scottish parliamentary elections due in May.