Where will the FTSE 100 begin 2026?

The report highs carry on coming. The FTSE 100 posted one other on 22 August when the 9,300 mark got here and went. 

The storming 2025 for London’s main index capped a storming 2024. The Footsie has been surging because the pandemic actually, up 66% in 5 years. That’s not even considering half a decade’s price of beneficiant dividends. 

So the place does it go from right here? Contemporary information till 2026 and primo champagne in nook workplaces? Or will boardrooms be sombrely bringing within the new 12 months with low-cost plastic cups and grocery store own-brand? Listed here are two potential outcomes. 

Optimistic prediction: the FTSE 100 surpasses 10,000

Let’s begin with the great things. 

The Footsie might surpass 10,000 earlier than the 12 months is thru and it wouldn’t even require an excessive amount of extra progress. The FTSE 100 stands at 9,300 as I write, which is simply 7.5% away from the five-digit determine. A 19% achieve in a single journey across the solar has been achieved a number of occasions this century already, and there are causes to suppose latest progress is a component of a bigger development. 

Excessive inflation is correlated with share worth progress — not completely, thoughts — however corporations do are likely to have inflation-resistant tendencies. Additionally, the latest inflow of traders onto the defensive-minded London index may proceed if issues develop in regards to the lack of earnings from tech and AI over within the States. 

Ought to the Footsie smash this goal, Tesco (LSE: TSCO) shares could be price taking a look at, for my cash. The nation’s largest grocery store has been outperforming the FTSE 100, up 14% 12 months so far. The battle in opposition to inflation is one not often removed from revenue statements and earnings calls, however margins have stayed constant. 

With an inexpensive valuation, a chunky dividend yield, and intensely defensive operations, the pink and blue store may be main the vanguard of additional FTSE 100 progress.

Pessimistic prediction: the FTSE 100 falls close to 8,000

Although the Footsie has loads to cheer about, there are some ominous-looking clouds on the horizon. Tariffs stay a query mark and should hit the 100 largest listed corporations in London, given round 80% of income is drawn from overseas. 

Any form of world financial slowdown, particularly in two key markets of US and China, might result in a stoop by the point we’re ringing within the new 12 months. The FTSE 100 is hardly insulated from home issues, both. With bond yields above 2022 ranges and a few painful tax rises rumoured to be on the agenda, a pessimist may say the 8,360 the Footise began the 12 months with may very well be the place it ends, too. 

After the sale of Tesco’s Asian operations, the plight its shares will hinge extra on home issues than anything. With a £50bn black gap rumoured to be within the price range, the nation may very well be taking a look at rises on the massive ticket taxes like revenue tax or VAT, which would scale back shopper spending. 

The century-old store has weathered many a disaster earlier than, so I’ve no plans to promote the shares I personal. And with a price-to-earnings ratio of 18 and a ahead dividend yield of three.21% thrown into the cut price, I’d say this inventory was one to contemplate.