FTSE 100: 2013 Round-up

The last year was a positive one for the FTSE 100 (UKX), with the blue-chip index rising 14.4% over the course of 2013.

What caused the index to rise and fall over the last 12 months and what can we expect as we move into 2014?

January

In the early part of the year, the blue-chip index was kept strong by the Federal Reserve’s asset purchase programme, which encouraged stability in markets on both sides of the Atlantic.

The FTSE 100 delivered its best start to the year since 1989 in January, with a 4.8% rise to 6276.

February

The strong start to the year seen in January continued into February, with investors who had not put their money into the index earlier keen not to miss out on any further gains.

Analysts put the interest in equities down to the “great rotation”, the phenomenon by which investors buy “safe” bonds during times of financial turbulence and then sell these to buy higher-risk shares when they begin to feel more confident.

The FTSE 100 ended the month at 6360.

March

Budget airline EasyJet (EZJ) and the London Stock Exchange (LSE) joined the FTSE 100 in the first reshuffle of 2013, while copper miner Kazakhmys (KAZ) and shopping centre management firm Intu Properties (INTU) dropped out.

The blue-chip index suffered in March due to panic as Cyprus struggled to fill a €5.8 billion (£3.2 billion) funding shortfall to receive an EU bailout, but still managed a slight improvement, reaching 6411 by the end of the month.

April

This was a mixed month for the FTSE 100 as fears over the potential for the Fed to begin tapering its asset purchase scheme knocked both the gold price and the index.

However, with a 0.3% gain to 6430, the FTSE 100 was able to end the month on a high. This gain meant that the index had risen for 11 consecutive months, its longest ever winning streak.

May

It was in May that the blue-chip index finally moved above the psychologically-important 6500 level, hitting a peak of 6840 on 22 May.

But growing fears over the tapering issue and an emerging lack of faith in Chinese economic growth caused some of these gains to be lost towards the end of the month.

Although the FTSE 100 managed to remain above the 6500 level, it closed at 6583, significantly below its mid-month peak.

June

Falling base and precious metal prices and Bernanke’s announcement that the Fed could be ready to begin tapering by the end of the year hit markets across the world, and the FTSE 100 saw its first month-on-month fall of 2013.

The index dropped as low as 6029, but had recovered a little by the end of the month to close at 6215.

June also saw the second index reshuffle, with the demotion of Russian commodities duo Polymetal (POLY) and Evraz (EVR), making way for housebuilder Persimmon (PSN) and supplier Travis Perkins (TPK).

July

The blue-chip index leapt 6.5% to 6621 in July, climbing back above 6500 as markets began to recover from the panic caused by Bernanke’s June announcement.

However, there was controversy as shareholder information group Pensions Investment Research Consultants (PIRC) revealed that women had accounted for just 16.5% of all appointments to FTSE 100 companies in the first seven months of the year, threatening the government’s target of having women occupying a quarter of FTSE 100 board seats by 2015.

August

This was a relatively quiet month for the index, in which the gold price improved as investors flocked to the “safe” asset due to fears that the West was preparing to attack Syria.

However, although this boosted gold miners Fresnillo (FRES) and Randgold Resources (RRS), the wider market still fell to 6412.

September

September saw the year’s third reshuffle, and the demise of Kazakh miner Eurasian Natural Resources Corporation (ENRC), energy services firm John Wood Group (WG.) and outsourcing firm Serco (SRP).

Retailer Sports Direct (SPD), packaging firm Mondi (MNDI) and Greek Coke bottler Coca-Cola Hellenic (CCH) moved up.

The index itself also moved up marginally to 6462, buoyed by the excitement of one of the largest corporate deals in history, Vodafone’s (VOD) sale of its 45% stake in Verizon Wireless for $ 130 billion (£71.6 billion).

October

The focus was back on the Fed again, and confidence was boosted by weaker-than-expected non-farm payroll figures, which made the threat of imminent tapering less likely and pushed the blue-chip index back above 6500 to 6731.

Initial public offerings were also in the spotlight, with the revelation that flotations in the main market and Alternative Investment Market (AIM) had earned £601 million in the third quarter, up from £214 million in the same period of 2012, and the successful flotation of Royal Mail (RMG).

November

Caution surrounding the release of US economic data as Bernanke continued to reveal nothing more than the fact that the Fed’s taper decision would be data-dependent pushed the FTSE 100 back down to 6650 in November.

The blue-chip index was also kept low by a number of companies going ex-dividend during the month.

December

In the final reshuffle of the year, newly-listed Royal Mail and equipment provider Ashtead Group (AHT) joined the FTSE 100 at the expense of miner Vedanta Resources (VED) and chemicals company Croda International (CRDA).

The Fed finally made the decision to taper, but this did not prevent a festive rally for the blue-chip index, as the prospect of strong US economic growth buoyed the market.

The index closed at 6749, 14.4% up on the beginning of the year.

What can we expect in 2014?

As the “great rotation” continues, analysts and fund managers expect further rises from the index in 2014.

Both Legal and General Investment Management equity strategist Lars Kreckel and Richard Buxton, head of equities at Old Mutual Global Investors, believe that it could reach 7300.

If this is the case it will be the first time that the FTSE 100 has traded above 7000 since its launch in 1984.

Ftse Futures

[email protected]

You may also like...

Rules of Discussion on FTSE 100: 2013 Round-up

1. This forum is for discussion of financial markets. Please respect others view even if they are contrary to you.
2. Member's comments should lead to value addition in forum discussion.
3. If anyone is found making repetitive Explicit/Abusive/Racial comments, his account shall be banned and old posts will be deleted.
4. Providing Advice/Recommendations/Tips is fine but it should be free. Members cannot ask to be paid for it. Paid Advice is stricly prohibited
5. Spam links are not allowed. Too much promotion or using Contact info in ID will lead to account ban.
IMP : Memebrs are requeuested to flag any violations to keep Forum Clean