Financial Times Stock Exchange (FTSE) 100 Index
FTSE 100 is a UK share index consisting of 100 largest companies as per the London Stock Exchange (LSE). These firms got classified based on the highest market capitalization. They come referred to as blue-chip companies.
Market capitalization refers to the size or share value. All the stocks of the listed constituent firms. The blue-chip index gets used as an indicator of leading financial firms in the UK’s. Which in turn reflects the health and stability of the country’s economy.
FTSE 100, established in 1984 with an initial value of £1000.
Other FTSE Indices
Also, to FTSE 100, the UK market got defined by two other FTSE indices, including FTSE SmallCap and FTSE 250. The three indices operated by a subsidiary of the LSE known as the FTSE Group.
Like FTSE 100 FTSE 250 and FTSE SmallCap gets weighted on market capitalization.
FTSE 250 consists of the leading companies as per the LSE listing from the 101st to 350th positions. FTSE SmallCap represents the largest firms in the 351st to 619th ranks as per the LSE listing. A combination of FTSE 100 together with the FTSE 250 makes up the FTSE 350 index.
How the Blue-chip Index is Calculated
The Market Shares Values Overview of FTSE 100
- The Sinking of the Blue-Chip Index:
The transmission of COVID-19 got confirmed in the UK towards the end of February 2020. And the blue-chip index dropped by 25% in more than 300 points, wiping out up to £469 billion.
As a result, the index shrunk into what gets known as the bear market, as share values fall more than 20%.
- FTSE 350 Constituents in a Negative Territory:
The blue-chip index reflected one significant one-day drop in history in March 2020. All the constituent companies in FTSE 350 were already within the negative territory.
Some of these companies having shares fall close to 50%. Retail businesses, travel, and oil sectors have suffered losses altogether.
- Travel Fears and Restrictions:
Even when flights from the UK get not restricted from the US. Fears raised by the pandemic affected the air-travel sector. And companies such as EasyJet and British Airways drop their shares to 7% to 9%.
- Blow in the Oil Industry:
As the largest oil companies across the globe crashed over oil prices. Firms as Royal Dutch Shell had their shares slip between 4% and 5%.
- The Sinking of the Dow Jones Index:
World Health Organization declared coronavirus to be a global pandemic. Moved investors to become quite sceptical about the worldwide economy’s stability. And the US Dow Jones index sink into the bear market territory.
- FTSE 250 Affected:
As the world continues to fight the pandemic, the FTSE 250 has also slipped down to 6.1%. Affected Firms includes British American Tobacco, HSBC Holdings. Also, Lloyds Banking Group, and Taylor Wimpey among others.
- The Recovery:
Although the blue-chip index has been down with hundreds of points. The index has been able to recover losses at some point. Beneficiaries of this recovery include companies such as Morrison Supermarkets PLC.
Yet, industries such as the travel and currency market continue to suffer misery. Because of the imposed measures and regulations to curb the pandemic.
Is Now the Right Time to Trade FTSE 100 Shares?
- Short Term Prospects
- Long Term Prospects
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