Does the FTSE 100 have another leg higher to come? The FTSE 100’s recent ascent to a record high of 8,505.22 on January 17, 2025, is primarily attributed to several interrelated factors. Firstly, a series of weak economic indicators, including lower-than-expected GDP growth and retail sales figures, have heightened expectations for the Bank of England to implement interest rate cuts. This anticipation has bolstered investor confidence, leading to increased market activity. Secondly, the depreciation of the British pound has favoured companies within the FTSE 100 that generate substantial revenues in stronger currencies, such as the US dollar. This currency dynamic enhances the profitability of these firms when converting earnings back to sterling, making their stocks more attractive to investors. Additionally, specific sectors have experienced notable growth. The energy sector, for instance, has benefited from rising oil prices, positively impacting major players like BP and Shell. Such sectoral performances have contributed to the overall uplift of the index.Moreover, UK companies have increasingly engaged in share buyback programs, with FTSE 100 firms committing to repurchase at least £56.9 billion in shares last year. This trend reflects corporate confidence and has provided additional support to the upward momentum of the index. Collectively, these factors have created a conducive environment for the FTSE 100’s recent gains, underscoring the complex interplay between economic indicators, currency fluctuations, sector-specific developments, and corporate strategies.Seasonal StrengthOver the last 10 years, the FTSE 100 has shown a strong track record during the first half of February.• Annualized Return: +43.44%• Winning Trades: 10 out of 08 (80%)• Median Return: 2.42% The cumulative profit trend underscores consistent positive returns, supported by favorable seasonality. The seasonal chart highlights a strong upward trajectory during this period, suggesting that should conditions remain positive for UK stocks then the seasonal pattern could add further strength to its outlook. Technical Perspective A look at the FTSE’s long-term price action reveals critical levels on the monthly weekly chart. The chart highlights a significant weekly channel breakout and that means major support sits at 8,400 where near term buyers may try to defend on any return to the channel high broken last week.Trade risks The outlook for the FTSE 100 is tied to the outlook of the UK economy which is particularly fragile at the moment.Video Length: 00:02:31More By This Author:Spring Ahead: Can Trump Turbo Charge Seasonal Strength in Consumer Discretionary Picks?
The Bank Of Japan’s Upcoming Policy Meeting: Implications For USD/JPY
The Impact For The JPY On A BoJ Rate Change
