Forty years ago today, Britain unveiled its largest and most renowned stock market index, commonly known as the “Footsie.”
Since its inception, the index has hosted a roster of some of history’s most successful companies. These range from behemoths in the oil industry, like BP and Shell, to major pharmaceutical firms such as AstraZeneca, notable for developing one of the initial Covid vaccines.
Over these four decades, the FTSE 100 has experienced both highs and lows. A significant challenge has been its struggle to match the performance of its global counterparts.
Nevertheless, being listed on this prestigious index remains a significant achievement for British companies, and conversely, being removed from the list is often seen as a setback. The FTSE 100 stands as one of the world’s most iconic financial symbols.
On the inaugural trading day of the year, numerous stock markets experienced a downturn after achieving gains in recent weeks.
This shift occurred as traders reevaluated their expectations for interest rate reductions. Previously, markets anticipated up to 160 basis points of cuts in the US for 2024, double the estimate of the Federal Reserve. However, current forecasts have adjusted to less than 150 basis points.
The likelihood of the Federal Reserve implementing a rate cut by March has decreased to an 85% probability. Similarly, the probability of a rate cut by the European Central Bank by March is now at 59%, a decline from 71% just last Thursday, as highlighted by Deutsche Bank analysts. The upcoming release of the minutes from the Fed’s latest meeting will provide further insights into the central bank’s strategy.
In the US, Wall Street saw a downturn, with the S&P 500 closing 0.6% lower and the Nasdaq experiencing a more substantial 1.6% fall. Asian stock markets also witnessed declines overnight. Japan’s Nikkei dipped by 0.2%, Hong Kong’s Hang Seng dropped by 0.9%, Australia’s market decreased by 1.4%, and South Korea’s market fell by 2.3%.
Despite pessimistic forecasts in 2023, global financial markets rallied, with stocks surging and bonds recovering from early losses. Many major stock indices recorded double-digit gains as decreasing inflation spurred expectations of rate cuts the following year, and recession concerns in the US abated. However, the UK’s FTSE 100 underperformed, gaining less than 4% last year.
Key Events:
- 8.55 am GMT: Germany’s unemployment data for December (expected: 5.9%).
- 3 pm GMT: US ISM Manufacturing PMI for December (predicted: 47.1).
- 7 pm GMT: Minutes from the US Federal Reserve Open Market Committee’s last meeting.
