Can the FTSE 100 Continue to Grow?
The FTSE 100 enjoyed a 14 day long winning streak, and while the run was broken on Monday, the index did manage to set a fresh intraday trading record during the early hours. The UK’s leading index is dominated by multinational companies, and because of this it is outperforming its European peers.
The index is benefitting from a weakness in the pound versus most of the major currencies - the Yen, Euro and US Dollar. Many of the companies listed on the London index take their revenues in foreign currency so the weak pound is bonus income for them, and it makes their exports more competitive.
The FTSE 100 is currently in a sweet spot in the international market, partly because of domestic factors, and partly because the US and Europe are experiencing their own issues. The Brexit fears will dominate the headlines in the UK for a long time, and this is, in a way, good news for the index.
The pound is facing numerous potential hazards, including the upcoming Supreme Court ruling over parliamentary scrutiny for the Brexit plans, and Theresa May’s forthcoming speech.
The FTSE 100 is also looking good because of the prospect of increased metals prices. The FTSE 100 places heavy weighting on mining and resource companies, and BP and Royal Dutch Shell have both been performing well of late. Metals prices are 24 percent below their average, even after the rally last year, so there is a lot of hope for gains there.