FTSE 100

Over the five-year period through 2025-26, the FTSE 100 Index is expected to grow at a compound annual rate of 7.5% to reach a closing value of 9647.3 on 31 March 2026. However, this trend masks a high degree of inherent month-on-month volatility throughout the focus period.

Nonetheless, generally speaking, the FTSE 100 Index performed relatively well at the start of the period, having increased by 2.7% in 2014-15, a year in which the index broke above the 7,000 mark for the first time - on 20 March 2015, the index closed at a value of 7,022.5. Seen by many as a psychological barrier for lack of growth since the turn of the millennium, a momentary surpassing of the 7,000-mark indicated that corporate profits were generally healthy and optimism was growing. Among other factors, raised hopes that Greece would stave off a deeper financial crisis; investors hoping that interest rates would remain at record lows; and confidence in the then Chancellor's plans to cut taxes for oil-linked companies and other duty cuts (e.g. on beer and wine), were identified as primary impetuses as to why top stocks increased in value and rose above the 7,000 mark.

However, on 31 March 2016, the FTSE 100 Index closed 10.3% lower against its value on 31 March 2015, making the FTSE 100 Index one of the worst performers among global stock markets during the year. Market capitalisation of the FTSE 100 constituents, in general, was rocked as evidence mounted that China's economy could suffer a severe slowdown, fuelling a collapse in commodity prices, particularly crude oil. This, in turn, triggered major slumps in the value of global mining giants, many of whom were listed on the LSE - exemplary of this, the share prices of mining conglomerate Anglo American, commodity trader Glencore, and metals and mining corporation Rio Tinto plunged 75%, 69.5%, and 34% during 2015 respectively. The London stock market also suffered from concerns that a rise in US interest rates would derail emerging market economies. Overall, the FTSE 100 Index suffered its worst new year start in 16 years on 4 January 2016, closing 158.9 points down to 6093.4 points as weak economic data from China and heightened tension in the Middle East wreaked havoc among investors on global financial markets - this drop equated to more than £38 billion being wiped off Britain's leading companies when markets closed on that Monday.

On 31 March 2017, however, the FTSE 100 Index posted a 15.4% increase relative to its value on 31 March 2016, and subsequently grew another 4.2% in 2017-18 while also breaking the 7,500 mark during the year. The EU referendum was the predominant stimulus to a better performance by the FTSE 100 index. As the trade-weighted value of the pound depreciated sharply against key currencies, particularly the euro and US dollar, any overseas profit for a UK company was worth more when translated back into pound sterling. Given that circa two-thirds of FTSE revenues and profits are earned overseas, the depreciation of the pound significantly boosted returns for FTSE 100 constituents, giving impetus to an increase in their market capitalisation. During 2018-19, the FTSE 100 did edge towards the 8,000 mark amid continually strong demand for UK blue-chip stocks - the persistently weak pound made sterling-denominated exports cheaper and flattered revenue earned in foreign currency. However, the benefits of a low exchange rate for LSE-listed entities that operate cross-border failed to offset overall downward pressure on the index during the year - the FTSE 100 index closed at 7418.2 points on 31 March 2019, down 1.2% compared to the its value on 31 March 2018. Generally caused by mounting Brexit uncertainty, weak sentiment in the eurozone, and surging tension between the United States and China, investors were spooked and, as a result, the sell-off of UK blue-chip stocks saw the market capitalisation value of several major LSE-listed companies tumble.

Irrespective of the trend over the four years through 2018-19, IBISWorld understands that the FTSE 100 index closed 23.5% lower on 31 March 2020, with a value of 5672.0 points, compared to its value on 31 March 2019. This trend has been heavily dictated by the outbreak of the coronavirus. First identified in December 2019, in Wuhan, Hubei province China, the coronavirus outbreak disrupted supply chains, currency markets, stock markets, commodity markets, consumer demand and business activity. Consequently, the FTSE 100 Index and stock markets across the globe plummeted as investors feared that the spread of the coronavirus would significantly impede economic growth, sparking a domestic and global recession. On 9 March the FTSE 100 Index closed with a 7.7% decline, while on 12 March 2020, the FTSE 100 Index closed with a 10.9% drop for the day, which marked the index's worst performance since the financial crash of October 1987. The significant index decline came as investors reacted to the string of developments which included the spread of coronavirus officially being declared as a global pandemic by the World Health Organization and a 30-day ban on flights to the United States from the majority of European countries.

In order to relieve concerns among business and consumer groups, the UK government introduced a number of stimulatory measures intended to give a shot in the arm to the economy amidst prevalent disruption. For instance, Budget 2020, announced on 11 March 2020 by Chancellor Rishi Sunak, committed to the biggest rise in public borrowing for 30 years and an end to a decade of Conservative austerity, with public sector net investment set to rise from close to 2% of national income, to 3%. Meanwhile, the Bank of England opted to slash the base interest rate to a record low 0.1% on 19 March 2020, and the government launched a loan scheme for small businesses on 23 March 2020 to help weather the storm. However, irrespective of government intervention, investors largely perceived these actions with a degree of cautiousness with the FTSE 100 Index falling by 4% on both 16 and 18 March 2020.

The FTSE 100 index closed at a value of 6713.6 points on 31 March 2021, reflecting a 18.4% increase on its value on 31 March 2020. However, the FTSE 100 was rather volatile during this year. While the FTSE 100 fell dramatically in March 2020 and remained low between March and October 2020 due to nationwide lockdowns, social distancing measures, enforced business closures and most importantly uncertainty. However, stock markets across the globe surged on the hopes of a potential breakthrough in the search for a vaccine for the coronavirus. On November 9 2020, US pharmaceutical firm, Pfizer, revealed early data which showed its potential vaccine is more than 90% effective. Markets, which were already buoyed after a clear end to the US election, piled on gains, with the FTSE 100 Index climbing by nearly 5%. Increased optimism among investors with regards to returning to a more normal life and progress with regards to the global pandemic is the primary reason for the projections that the FTSE 100 Index closed 18.4% higher in March 2021 compared to the previous year.

The FTSE 100 index closed at a value of 7578.8 points on 31 March 2022, reflecting a 12.9% increase on its value on 31 March 2021. While this year featured a degree of volatility, the general uptrend was predominately as a result of the continued COVID-19 vaccine rollout across the United Kingdom and the globe, couple with diminishing uncertainty stemming from the UK-EU withdrawal deal made in December 2020. However, during the final month of the year through 31 March 2022, the market contended with some significant global headwinds which resulted in some weakness. These factors will be discussed within the outlook section.