After a long period in which the results of the London Stock Exchange were modest compared to the rest of the European market, there has been a significant turnover in recent months. The FTSE 100 index has grown by almost ten percent since the beginning of the year, thus overtaking the European STOXX 600, which recorded a growth of 7.5 percent in the same period.
Over the past six weeks, the leading index from the British market has continuously outperformed its European competitors – the longest streak of such results since the end of 2022, when the weakening of the British currency further benefited exporters within the index.
A new view of the United Kingdom
One of the leading people in the investment house St. James’s Place, Justin Onuekwusi, told the Financial Times that after a long period of caution, “large institutional investors, such as pension funds and non-UK asset managers, are turning to the UK again”.
Analyst from Forbes, Joe Hegener, warns that indebtedness of citizens and the state of personal finances have reached very high levels, which could limit consumption in the future if credit conditions deteriorate.
Despite the strengthening of the pound against the dollar by around ten percent, the structure of the FTSE 100 index – dominated by companies from the healthcare and retail sectors such as AstraZeneca and Tesco – provides stability and resilience. Companies from the energy sector such as BP, as well as mining giants including Anglo American, additionally profit from the rise in raw material prices.
Compared to the EU, Britain has an advantage because it previously signed a trade agreement with the US. In contrast, the European Union is threatened with tariffs of up to 30 percent if no agreement is reached with Washington by August 1.
According to The Economist, the London market currently acts as a “stable harbor in a world of uncertainty”. Analyst Dan Coatsworth of AJ Bell even describes it as “a cup of tea and a biscuit” – maybe without big jumps, but reliable and calm.
However, the challenges have not disappeared – inflation continues to exceed the Bank of England’s target, and the weakening of business activity and employment are additional worries for economic experts.
