At this time of year, brokers love to share their stock market forecasts for the year ahead. Already, I’ve seen a few for the FTSE 100.
Personally, I’m not a fan of trying to predict the exact level of a stock market index 12 months out. That’s because there’s a lot of guesswork involved.
That said, I do have several more general predictions for the FTSE 100 for 2024. Here are three of them.
A look back first
Before I reveal my 2024 predictions, let’s first look at how much predictions for 2023 fared.
Last December, I said:
- The FTSE 100 would see some volatility in the first half of 2023
- Some Footsie companies would cut their dividend payouts in 2023 while others would raise them
- The FTSE 100 would be a stock picker’s index this year
I’m pretty happy with these as all three were pretty much spot on.
We definitely saw some volatility in H1. After hitting 8,000 in February, the index crashed to near 7,200 in March.
We also saw dividend divergence. While a lot of companies raised their payouts, there were some firms that made cuts, such as miners and housebuilders.
Finally, it was very much a stock picker’s market. While the FTSE 100 as a whole has gone nowhere, there have been some huge gains within the index. For example, Rolls-Royce, 3i Group, and Sage are all substantially up this year.
2024: a better year?
As for my FTSE 100 predictions for 2024, the first is that the index will have a better year than 2023.
There’s quite a bit of economic uncertainty as we head into 2024. But there are also plenty of reasons to be optimistic from an investment perspective.
A reduction in interest rates – which looks like a real possibility in 2024 – is one.
Earnings growth from FTSE 100 giants such as AstraZeneca, Unilever, Diageo, London Stock Exchange Group, and BAE Systems, is another.
All things considered, I think there’s a good chance the Footsie will deliver solid returns next year.
8,000 and over
My second is that the FTSE 100 will rise above 8,000 at some stage during the year.
As I write this, the index is near 7,575. So a move to 8,000 would only represent about 6%. I think that’s very achievable in 2024, especially given the underwhelming performance of the index this year.
Where the index ends 2024 however, is anyone’s guess.
Time for takeovers
My third and final prediction is that we will see some takeover activity within the FTSE 100 in 2024.
Right now, a lot of UK-listed companies look really cheap. Oil entities, consumer goods companies, banks, healthcare firms… there are many undervalued businesses.
International companies and investors have been spotting value. This year, there has been a huge amount of takeover activity in the UK small-cap space. I reckon we could see them coming for FTSE 100 companies next.
So investors may want to consider allocating some capital to dirt cheap, individual FTSE 100 stocks in 2024.
