FTSE 100 Predictions for 2021 and Beyond

Stock market returns in 2020 were eerily similar to what happened in 2009. We're seeing some strength emerging from a deep stock market recession. Even though the future performance of FTSE 100 may not resemble past results, it gives investors hope.

UK stocks are still trading at a hefty discount to their international peers, so now might be a good time to jump in. In what may become a bull market, can investors look for returns in the “Footsie”? Follow along with our FTSE 100 predictions to find that out.

Brief Overview of FTSE 100 

The FTSE 100 Index (The Financial Times Stock Exchange 100 Index) represents the 100 largest companies by market capitalization listed on the London Stock Exchange. The index value changes alongside with share prices of the indexed companies and their market cap.

Index characteristics:

• Launch date: January 3, 1984
• Number of constituents: 101
• Net Market cap (GBPM): 1,516,013
• Dividend yield: 4.7%

Index constituents are readjusted every fiscal quarter - March, June, September, and December. The list itself and the value of each constituent can be changed upon review by the index provider FTSE Group. The FTSE 100 accounts for around 80% of the entire market cap of the LSE. This is why many market analysts, traders, and investors view FTSE 100 as a market for the wider UK stock market, just like with Dow Jones or S&P 500 for US stocks. 

However, it’s important to note the uptick in international companies counted in the index. And while it’s still the best health indicator of the UK economy, it’s not only about UK-based companies. 

Key Factors in FTSE 100 Price Changes

While there are numerous influences at play, we want to point out the main market-moving events. These three factors have the biggest impact on FTSE predictions. 

Constituent Companies

The collective value of listed companies affects the value of FTSE 100 on a daily basis. These companies have the biggest weighings:

• Royal Dutch Shell - A global group of energy and petrochemical companies
• British Petroleum - One of the world's largest integrated oil and gas companies
• AstraZeneca and GSK (GlaxoSmithKline) - International pharmaceutical companies
• British American Tobacco - The world’s largest tobacco group
• Rio Tinto - A leading global mining group
• HSBC - One of the largest banking and financial services institutions
• Unilever - Multinational consumer goods

Economic Recovery and Improved Outlook

Vaccination programs are continuing at pace, easing lockdown restrictions, and additional support announced in the Budget - all this leads to a much more positive outlook than anyone could have expected 12 months ago. The Organization for Economic Cooperation and Development (OECD) expects growth for the global economy. As for the UK specifically, it does appear that the economy will be less ‘scarred’ than expected. With FTSE 100 being so tied to the wider UK market, it should follow the same upward path. 

Pound Sterling Fluctuations and Inflation

In the post-Brexit era, FTSE 100 companies receive over 70% of their revenues from overseas. It may be surprising, but the drop in the value of the Pound Sterling increases corporate earnings due to the converted revenue. 

For example, if the US Dollar strengthens, for example, due to stimulus optimism, against the Pound, the FTSE 100 trades higher. Similarly, a strengthening EUR against GBP gives the index a boost as a significant portion of revenue comes from France, Germany, and Italy.

Historical Performance of the FTSE 100 Index

Over the several decades when the FTSE 100 index has been round, obviously, a lot has happened. But taking a glance at the price chart, it’s clear that the price has been consistently growing, which it has done along with the UK economy. One of the biggest hurdles was in 1998 amid the global financial meltdown. But it didn’t stop FTSE 100 from rising to its all-time high of 6930.2 GBP on December 26, 1999. 

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Past performance of FTSE 100 until 2005

After the collapse of a technology bubble and the September 11 attacks, the index price found itself at around 4430 GBP. After a short-lived recovery with over 5,300 GBP in 2002, the market fell again in 2003. In February 2003, FTSE 100 fell below 3,500 GBP.

Past performance of FTSE 100 in 2005-2020

The 2005-2015 period can be characterized by noticeable fluctuations inside a long-term uptrend. The stock market sell-off in 2015-2016 didn’t leave FTSE 100 untouched. Even though the companies listed remained relatively strong, the index price fell from 7,000 GBP to 5,700 GBP.

The price rose to a higher range (above 7,500 GBP) and was disrupted in 2020 by the spread of COVID-19.

How Is FTSE 100 Performing Now?

London’s FTSE 100 benchmark sharply declined during 2020 - from 7,400 GBP on February 16 to below 5,200 GBP on March 15. This was the worst performance since the financial crisis in 2008. But the wider UK market fell on a scale not seen since 1706.

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FTSE 100 chart in 2020-2021

Over the course of 2020, FTSE 100 gained a quarter of its price back, which is quite significant. It didn't take long for it to reach 6,000 GBP and then 7,000 GBP.

The factors which worked against the FTSE 100 in 2020 - a deep recession and Brexit - started to fade into the background, giving the index a chance to bounce back. The vaccine news has been the catalyst to the growth. 

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FTSE 100 chart in March-May 2021

Now, let’s move one to FTSE predictions 2021 and beyond.

Short-Term FTSE 100 Price Prediction for 2021

The table below was sourced from Long Forecast, which uses AI and backtesting-based mathematical systems to forecast major turning points. Here, you can see where the index may achieve certain gain or loss benchmarks during the second half of 2021. The average price might even get close to 8,000, which it hasn’t done since 2018. 

Month	Minimum Price (GBP)	Maximum Price (GBP)	Average Price (GBP)	Total Change (compared to May 2021)
June 2021	6558	7396	6977	0.10%
July 2021	6785	7651	7218	3.56%
August 2021	6938	7824	7381	5.90%
September 2021	7069	7971	7520	7.89%
October 2021	7075	7979	7527	7.99%
November 2021	7159	8073	7616	9.27%
December 2021	7517	8477	7997	14.73%

Since consistents play a huge role in FTSE 100 price formation, let’s take a quick look at expectations for its biggest companies: 

• Royal Dutch Shell: With 9 analysts offering 12-month price forecasts, the median estimate represents a 31.39% increase (compared to May 2021).
• Unilever: Out of 12 Wall Street analysts, there are currently 3 “Sell” ratings, 2 “Hold” ratings, and 7 “Buy” ratings.
• BP: 23 Wall Street analysts have issued ratings for 2021, and there are 3 “Sells”, 7 “Holds”, and 13 “Buys”.
• British American Tobacco: 10 analysts are very hopeful about this stock, and one maintained a “Hold” rating.
• AstraZeneca: Even though this stock is going through a temporary consolidation, it received 14 “Buy” ratings. 

Overall, these companies alone have the power to drive FTSE 100 further up. 

FTSE 100 Predictions for the Next 5 Years

In terms of the FTSE 100 index performance in 2022, the 12-month forecast is provided in the table below. Long Forecast predicts further rise with a drop towards the end of the year. 

Month	Minimum Price (GBP)	Maximum Price (GBP)	Average Price (GBP)	Total Change (compared to May 2021)
January 2022	7141	8053	7597	9.00%
February 2022	7163	8077	7620	9.33%
March 2022	7120	8028	7574	8.67%
April 2022	6819	7689	7254	4.07%
May 2022	6809	7679	7244	3.93%
June 2022	7150	8062	7606	9.12%
July 2022	7507	8465	7986	14.58%
August 2022	7132	8042	7587	8.85%
September 2022	6776	7640	7208	3.41%
October 2022	6545	7381	6963	-0.10%
November 2022	6720	7578	7149	2.57%
December 202	6760	7624	7192	3.19%

Despite the decrease in September-December of 2022, FTSE 100 is estimated to pick up steam in the coming years. We have collected FTSE 100 predictions for the next 5 years to show the likelihood of the asset rising/falling. Check out the details below.

Direction	Probability
Down at least 20%	5%
Down at least 10%	6%
Down	8%
Up	92%
Up at least 10%	91%
Up at least 20%	90%
Up at least 30%	88%
Up at least 40%	85%
Up at least 50%	80%
Up at least 100%	63%
Up at least 150%	45%
Up at least 200%	17%

Technical Analysis of the FTSE 100 Index

From a technical point of view, the big picture for the UK blue-chip index is positive, and the market is holding firmly. After a consistent bull trend since the later part of last year, the recent sell-off can be considered a natural consolidation. 

Where it gets more interesting for traders is technical indicators. There are diverse trading indicators, but the best ones for the indices market include:

• Moving Averages
• Exponential Moving Average Indicator
• Relative Strength Indicator
• Average Directional Index
• Stochastic oscillator Trading Indicator

Before going through details, here is a summary of what signal technical indicators are sending to traders for a 1-day timeframe. 

Technical summary for FTSE 100 for 1D timeframe

Oscillators: 

• Relative Strength Index (14) - 54.4 - Neutral
• Stochastic %K (14, 3, 3) - 62.1 - Neutral
• Commodity Channel Index (20) - 15.4 - Neutral
• Average Directional Index (14) - 19.2 - Neutral
• Awesome Oscillator - 48.4 - Neutral

Moving averages:

• Exponential Moving Average (50) - 6923.2 - Buy
• Simple Moving Average (50) - 6919.1 - Buy
• Exponential Moving Average (100) - 6784.7 - Buy
• Simple Moving Average (100) - 6788.0 - Buy
• Exponential Moving Average (200) - 6629.5 - Buy
• Simple Moving Average (200) - 6457.8 - Buy

UK100 is still below the pre-pandemic levels - it has 10% to catch up to where it was. For comparison, we put SP& 500 as another popular index, which is trading 35% higher than FTSE 100.

FTSE 100 vs. S&P 500 with technical indicators applied

The speed of MA crossovers gives a signal that the market is slightly overbought. Also, below are key support and resistance levels that you should watch out for:

• S1 - 6947.09
• S2 - 6972.64
• S3 - 6999.78
• R1 - 7052.47
• R2 - 7078.02
• R3 - 7105.16

If the FTSE 100 crosses above 7,000, the resistance will be pushed higher, and we might see it climbing to the top since the pandemic outbreak at 7,167.

What Do Experts Think About FTSE 100?

UBS set its price point for the end of 2021 at 7,200. Compared to the 6460 mark at the end of 2020, this is quite an achievement in the context of economic disruption. Analysts at HSBC investment bank also shared a positive view. According to these analysts, the reason for such a positive outlook comes from the anticipated growth of United Kingdom firms’ valuations after fighting through twenty-year lows. In addition, they expect the Pound to surge along with the equity market. 

Andrew Slimmon, Head of Applied Equity Advisors Team at Morgan Stanley, recently noted that historically, the second year of a newly formed bull market shows higher performance. While investors saw poor stock market returns last year, the possibility of the coronavirus pandemic being soon behind us can create more volatility along the way. 

Taking lessons from 2009-2010, Andrew Slimmon added that stocks would likely need to take a breather, much as they did back then. So, the growth might not be explosive, but overall returns should be fair.

What to Do With FTSE 100 - Trading vs. Investing?

Hopes for the global economic recovery have certainly helped the stocks market at the start of 2021. Now FTSE 100 even has a stronger standing than some of its biggest overseas counterparts. Based on further forecasts, the index can become a timely addition to an investing portfolio.

As FTSE 100 started recovering from its drop in March 2020, many investors were too slow to react and bet on it. The market climbed significantly before the bears turned into bulls. If you don’t want to miss out on future opportunities, trading may be the best and fastest way to capitalize. While returns are not guaranteed, the data and historical performance suggest lucrative trading leveraged possibilities. 

If you consider getting into stock and CFD trading and take advantage of this year’s outperformers, there is no better way to start than with Libertex. Create a demo account, and you’ll have a risk-free opportunity to put your knowledge to practice. After you become more familiar with all the tools available to you, you can turn to live trading to potentially see great returns. 

Why to trade with Libertex?

• access to a demo account free of charge
• technical assistance to the operator 5 days a week, from 8 a.m. till 8 p.m. (Central European Standard Time)
• leverage of up to 1:600 for professional clients
• operate on a platform for any device: Libertex and Metatrader

FAQ

Is FTSE 100 a Good Investment in 2021?

FTSE 100 companies have always been considered high-quality investments since these are the strongest ones in the UK market. Therefore, Britain’s blue-chip share index may become a good investment in the new bull market that is forming this year.

Is FTSE 100 Worth Buying?

FTSE 100 recently hit 15-month highs, and there is no indication of a reversal amidst this outperformance. Analysts say that the odds are increasing on positive returns, which gives an indication that FTSE 100 is a “Strong Buy”.

What Will FTSE 100 Be Worth in 2025?

Based on historical price-based estimations, there is a 90% chance of the FTSE 100 price rising by at least 20%. Moreover, there is a 63% chance of the index at least doubling in price in the next several years.