The UK benchmark index looks set to post a fall for the current year, pressured by rising interest rates, worries over the global economy, Brexit concerns as well as the strained trade relations between the US and China which have sapped market sentiment around the world. With Britain set to leave the European Union next year, the prospects for the FTSE 100 do not seem much brighter going forward.
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Tough 2018 for FTSE 100
The FTSE 100 has seen a tough 2018, staying on track for about a 12-percent loss, following two years of gains. The blue-chip index has suffered alongside other benchmarks around the world from the US-China trade row which has dampened investor sentiment and has particularly weighed on blue-chip miners.
The protracted Brexit negotiations and the ongoing political uncertainty at home have also pressured the Footsie throughout the year, weighing particularly on London-listed housebuilders. Persimmon (LON:PSN), Taylor Wimpey (LON:TW), Barratt Developments (LON:BDEV) and Berkeley Group (LON:BKG) all on track to post losses of more than 20 percent for the year.
Muted gains next year
Going forward, Reuters reported this month that brokers, fund managers and analysts have predicted in a poll by the newswire that the while FTSE 100 will claw back some ground next year, gains will be much more muted than originally expected. The median forecast of almost 30 respondents is for the FTSE 100 to end 2019 at 7,500 points.
The newswire further reports that global fund manager allocations to UK equities have fallen to one standard deviation below the long-term average, according to a survey this month by Bank of America Merrill Lynch which also found that investors see UK companies’ profits outlook as the least favourable.
“Anything which gives a semblance of hope and faith that the Brexit angst and uncertainty may be worked through is going to provide some scope for these moves to be reversed – much more,” Chris Bailey, European strategist at Raymond James, told Reuters.