UK 100 FTSE 100 Index

Interesting facts

The UK 100 is one of the most widely used metrics when evaluating the performance of the UK economy. The index is comprised of the largest companies in the UK by market capitalisation, and the larger the company the more influence it has over the index’s price. In the UK, the largest companies are usually found in the mining, energy (particularly oil and gas) and financial services sectors.

Price drivers

The UK 100 is closely linked to economies throughout Europe through trade and geographical proximity, thus it can be influenced by investor sentiment surrounding large equity markets in Europe. Furthermore, during times of global crisis the economy can sometimes ignore domestic fundamentals in favour of overall investor sentiment (for example: 08/09 financial crisis and the European debt crisis), with the possible exception being the Bank of England’s interest rate decisions and policy announcements. More specifically, the index is susceptible to the sentiment surrounding global banking markets due to the high weighting banking stocks have on the index. Also, mining and energy companies account for a significant proportion of the index, which means investors should keep an eye on commodity prices and the level of demand for these assets.