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Peer2Peer Finance News | November 25, 2017

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FTSE 100 starts 2017 at record highs

FTSE 100 starts 2017 at record highs
Marc Shoffman

THE FTSE 100 ended 2016 at new highs and started the New Year at record levels, breaking through the 7,200 barrier.

The blue-chip index closed at 7,142 on the last day of trading in December 2016 and reopened this morning to hit 7,205.

It means the FTSE is now up 14 per cent on a year ago and analysts are predicting a positive year for the main market.

“In the past 30 years the stock market has not posted a single year of gains with losses in the years either side,” said Richard Stone, chief executive of The Share Centre. “History would suggest that following a rise in 2016 breaking two years of losses in 2014 and 2015, 2017 may be another positive year for the market.

“With the overseas earnings of FTSE 100 companies supported by weak sterling, with fiscal loosening in the US and the UK following the respective votes in 2016, and with low interest rates, there are a number of reasons why investors may look optimistically into 2017.”

The resilience of the FTSE 100 in the wake of the Brexit vote surprised many in the Remain camp, who had predicted a sharp downturn or increased volatility. The buoyancy of the stock market is good for people with stocks and shares ISAs, but could mean they are less likely to consider P2P investments through the Innovative Finance ISA if they are already getting good returns.

Read more: No Bregrets – How P2P is dealing with Brexit

Read more: Nicola Horlick: P2P is less risky than stock market

“At a broader level some theories suggest the stock market goes in 15 to 20 year cycles,” added Stone. “20 years of gains, followed by 20 years of stagnation or consolidation, followed by 20 years of gains. This has been in evidence since the early 20th century. The market posted a strong performance through to the late 1990s and the dotcom boom. Only now, nearly 20 years later the levels reached then have only just been reached again.

“Based on this broader cyclical theory this could mean we are beginning to enter the next period of stock market appreciation. Of course, conversely we could be entering the period that will prove that theory wrong.”

Read more: Why investments are the new savings