Surprise! The FTSE 100 could be on track to reach 10,000

Upcoming interest rate cuts could send the FTSE 100 to over 10,000 by as early as February 2025. Here’s what investors need to know.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Middle-aged white man pulling an aggrieved face while looking at a screen

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

2024 has been a terrific year so far for the FTSE 100. The UK’s flagship index is up by double digits after including dividends. And with inflation only a few points away from falling in line with economic targets, businesses are starting to thrive again.

We’ve already seen impressive growth figures start to emerge from leading businesses like AstraZeneca, Rolls-Royce, and Compass Group (LSE:CPG), among others. And providing the macroeconomic landscape continues to improve, some analyst forecasts have become increasingly bullish.

In fact, there’s a chance the FTSE 100 could reach 10,000 points this time next year! But it may not, of course.

Hitting a new high

According to the latest outlook from The Economy Forecast Agency, the FTSE 100’s expected to reach as high as 9,907 by December. But this upward trajectory may continue breaking through the 10,000 point threshold for the first time in history as early as February 2025.

If that turns out to be the case, then investors may be set to enjoy yet another bout of double-digit growth. After all, compared to today’s level of around 8,200, that’s a 22% increase.

Of course, investors should always take forecasts with a pinch of salt. There are a lot of assumptions that go into these figures, and a lot has to go right in order for the FTSE 100 to break a new record.

It’s worth pointing out that 10,000 is the most optimistic forecast, with 8,854 the least. That still signals potential growth, but investors may end up with considerably less than expected.

Nevertheless, this bullish prediction is a welcome sight, given the pessimistic nature of the stock market over the last few years. There’s no guarantee of what will happen over the next 12 months. But interest rate cuts could provide a powerful catalyst for sparking share price growth, especially given that so many stocks continue to trade at relatively cheap multiples.

What to buy?

Now that we’re seemingly at the start of a new bull market, snapping up terrific companies at a good price could lead to immense wealth creation in the long run. That’s especially true if it ends up lasting as long as the last one. And the first place I’d start my search is actually among the companies that are already delivering.

Take Compass Group as an example. The contract caterer recently published its interim results, which once again displayed double-digit sales and earnings growth. As such, profits came in higher than expected, and management’s outlook suggests this trend will continue throughout the rest of 2024.

Despite this encouraging turn of events, the shares are still flat compared to a year ago. There may be some cause for concern given that capital expenditures have increased as a proportion of revenue, placing pressure on profit margins. Yet that hasn’t stopped operating profitability from returning to near-pre-pandemic levels. So it’s a firm that merits a closer look, to my mind.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Compass Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

To build a passive income flow, I’d follow this Warren Buffett approach

Warren Buffett has set up passive income streams most people can only dream about. Our writer sees some practical lessons…

Read more »

Growth Shares

As the boohoo share price falls, could it become a penny stock in 2025?

Jon Smith outlines some of the recent problems involving the boohoo share price and considers if things could get even…

Read more »

Young Asian woman with head in hands at her desk
Investing Articles

Here are the worst-performing FTSE 100 shares over the last 5 years

These five FTSE 100 shares have been complete duds over the last half decade. But is there potential for a…

Read more »

Investing Articles

Nvidia stock has tripled this year! Can it keep rising?

Nvidia's latest sales update showed strong growth and the stock's been on a tear so far in 2024. So is…

Read more »

Investing Articles

The JD Sports Fashion share price has just plunged another 16%! Buy or sell?

Harvey Jones is reeling after another sharp drop in the JD Sports Fashion share price. Should he seize the chance…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

This once-great FTSE 250 UK fashion retailer is down 47%, so is it time for me to buy?

A formerly iconic UK fashion brand, this FTSE 250 firm has fallen out of favour. But it has a new…

Read more »

Investing Articles

Nvidia share price dips despite strong Q3 results. What can we expect now?

Despite posting strong Q3 results after yesterday's market close, the Nvidia share price slipped 2.5% in aftermarket trading. Mark Hartley…

Read more »

Businesswoman analyses profitability of working company with digital virtual screen
Investing Articles

An outstanding interim report sends the Halma share price surging 10%

News of 13% revenue growth and a 17% increase in earnings per share has the Halma share price rising. And…

Read more »