29th Dec 2023 15:11
(Alliance News) - In a year when it topped the 8,000 mark for the first time, some would have expected the FTSE 100 to offer a lot more in 2023, though that achievement was as good as it got for the large-cap benchmark.
The FTSE 100 achieved a gain of 3.8% since the conclusion of December 2022, ending the year on 7,733.24 points. This was despite hitting an all-time high of 8,047.06 on February 16.
Helped by the likes of carmaker Stellantis NV and cosmetics firm L'Oreal SA, the CAC 40 in Paris surged 17%. The DAX 40 in Frankfurt jumped 20%. Software firm SAP SE, one of its best-performing components and also one of its largest, climbed around 45% in 2023.
"The FTSE 100 has stumbled over the line, eking out a modest gain for the year but failing to shoot the lights out. Compared to its international peers," Hargreaves Lansdown analyst Susannah Streeter commented.
"The FTSE 100 reached the heady heights of 8,047.06 in February but has struggled to regain its form. Britain's blue-chip index still appears unloved with attention grabbed by the bright lights of Wall Street and the tech heavy makeup of New York's exchanges, with a frenzy for all things AI fuelling buying behaviour. Even though the Brexit hangover has eased, the UK's stagnating economy and volatile political scene of recent years appears to be putting off investors."
Streeter added: "But the DAX's rally has come despite unfavourable data showing Germany's economy is contracting. However, with an energy crisis being avoided, gas and crude prices coming down and inflation falling more sharply than expected, it's buoyed sentiment for listed industrial companies."
Looking to 2024, cooler inflation and a UK general election could spark some life into the FTSE 100.
"The resilience of UK consumers, and the underlying economy, may once again exceed expectations in 2024. Hopes of a soft landing for the US may also help the index, given the multinational makeup of companies which are reliant on strength in the global economy. Crude prices are expected to head for higher ground amid Middle East tensions and actions from Opec+, which could help provide a tailwind for listed energy giants. A big dose of stimulus for China's faltering economy would help propel miners higher, while longer-term demand for metals and minerals to power the net zero transition should also provide support," Streeter added.
Rising oil prices could lift the likes of Shell PLC and BP PLC, while better economic prospects for China will be good news for miners. China is a major buyer of minerals.
Miner Anglo American PLC was among the most underwhelming performers on the FTSE 100 in 2023. The stock's value ended the year 39% lower than it started it. Shares have steadily declined, though a downbeat update earlier this month did a hefty amount of damage too.
Anglo American earlier in December said it expects production for 2023 to increase by 3%, thanks Quellaveco copper ramp-up in Peru and solid iron ore production, which was offset by ore grades in Chile, and lower PGMs and diamonds production.
However, for 2024, production is tipped to decrease by 4%, with unit costs falling by 2%. Production for 2025 is expected to decline a further by 3%, before climbing 4% in 2026.
Impressing, meanwhile, Rolls-Royce Holdings PLC impressed, jumping over three-fold as Chief Executive Officer Tufan Erginbilgic makes his mark on the jet engine maker.
Erginbilgic was installed as Rolls-Royce chief executive at the start of the year. His tenure has offered promise so far and he made waves just days into his stint as CEO after he described the firm as a "burning platform".
Away from the large-cap index, investors in JD Wetherspoon PLC and Mitchells & Butlers PLC have plenty to raise a glass to, with the stocks both rising more than 80% in 2023.
The pub and bar operators went into the year hoping for a revival, after the sector was battered by Covid-19 worries. Investors were sceptical about a quick recovery for the sector, with shares in Wetherspoon and M&B tumbling around 50% in 2022, before this year's recovery.
Wetherspoon shares are around 50% off their February 2020 level, however, while M&B is down some 30%.
By Eric Cunha, Alliance News news editor
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