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Itโs no secret the FTSE 100 index is at present having fun with its day within the solar. Nevertheless itโs rapidly turning into extra of an prolonged Indian summer time, as January marked the Footsieโs seventh straight month of positive aspects.
This was its longest month-to-month profitable streak in over 12 years!
Thatโs fairly exceptional contemplating the risky previous few months, with on-off tariffs, the Autumn Funds uncertainty, AI bubble jitters, Venezuela, Greenland, and extra.
One other spectacular report is that the FTSE 100 just lately jumped 1,000 factors within the shortest time ever. It took simply 171 days to go from 9,000 to 10,000, in line with AJ Bellโs information.
The earlier report was 229 days again within the late Nineties when it went from 5,000 to six,000.
And the optimistic momentum has continued into February, regardless of billions been wiped off the worth of information corporations like London Inventory Alternate Group (LSE:LSEG) and RELX yesterday (3 February).
As I write, the FTSE 100 is above 10,400.
Whyโs it on fireplace?
Final 12 months, the blue-chip index returned 25.8%, together with dividends. This was its fifth-best 12 months since inception in 1984.
The return even beat the S&P 500, which is filled with tech titans that resemble the company equivalents of nation states.
Whatโs happening right here? Effectively, I donโt wish to rain on the Footsieโs parade, however for perspective it needs to be famous that 2025 was a really robust 12 months for many main world indexes.
When in comparison with many of those, the FTSE 100โs return doesnโt look so spectacular.
Nonetheless, the index has benefitted from traders nervous about unpredictable US authorities coverage and extremely priced S&P 500 shares. As such, it has develop into a little bit of a protected haven in troubled occasions, together with gold.
Weโve seen elevated curiosity from overseas traders trying to diversify their holdings and the FTSE 100 has additionally shone in the course of the extra tumultuous intervals due to its plethora of defensive-style corporationsโฆThe UK is a wealthy searching floor for dividends.
Dan Coatsworth, AJ Bell.
AI disruption fears
A daily criticism of the index is that it lacks high-growth tech corporations, notably in synthetic intelligence (AI). Nevertheless, this perceived Achilles heel has truly been a bonus recently, as traders have began to fret that AI may in actual fact be a Pandoraโs Field.
Thatโs definitely the way it feels proper now for traders in London Inventory Alternate Group, or LSEG. After crashing greater than 10% yesterday, shares of the monetary information supplier are down by a stunning 40% in 12 months.
The large concern right here is that AI corporations like Anthropic (with its Claude product) may poach clients that at present use LSEGโs information terminals (Workspace/Refinitiv). This mayโt be discounted totally.
Nevertheless, itโs price noting that analysts at UBS suppose the chance is exaggerated. They level to LSEGโs information provide offers with Anthropic, OpenAI (ChatGPT), and others.
Furthermore, the ahead price-to-earnings a number of has collapsed to lower than 16. And the forecast dividend yieldโs now 2.2%, which provides weight to the funding case contemplating LSEGโs 15 years of consecutive dividend development.
After all, given the uncertainty, it could take a courageous soul to pile into the inventory at present. Nevertheless itโs price noting that UBS simply slapped a 12-month share worth goal of ยฃ110 on LSEG. Thatโs 55% larger the present worth!
On this foundation alone, I feel itโs price investigating additional.
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