FTSE 100 to outperform S&P 500 in 2025 says Wall Street
Equity analysts have predicted that the FTSE 100 will have a record year in 2025, helped by lower interest rates and higher oil prices.
According to data compiled by Bloomberg, Wall Street analysts believe the UK’s flagship blue-chip index will jump 15 per cent in 2025, its best year since 2009.
In 2024, the index returned 5.7 per cent.
In comparison, Wall Street has pencilled in growth of just nine per cent for the S&P 500.
“The combination of mildly accelerating UK economic and earnings growth, tame inflation, rate cuts by the Bank of England and Brent crude oil prices remaining in this year’s range of $70 to $90 per barrel, may help to deliver solid stock market performance in 2025, above the 30-year average of six per cent,” said Jeffrey Kleintop, chief global investment strategist at Charles Schwab.
Meanwhile, Pictet analysts noted that the UK was less exposed to US tariff hikes than the euro zone because it is more focused on services and does not have a goods trade surplus with the US.
“The dominance of energy stocks and defensive sectors in the FTSE 100 also makes it an attractive hedge for stagflation – which we see as the biggest risk to our base case scenario,” they added.
UK economic growth set to slow
Despite the strong performance predicted for the FTSE 100, analysts don’t seem as optimistic about the UK economy as a whole.
Economic forecasters expect the UK to grow 1.3 per cent in 2025, up from the 0.8 per cent estimated for 2024, but below the rate of growth forecast at the beginning of 2024.
However, these predictions should be taken with a grain of salt, as analyst predictions are frequently wrong.
At the start of last year, analysts expected the S&P 500 to grow by eight per cent, while it actually grew by 23 per cent. In 2021, similar predictions were made, but the index dropped 20 per cent.