FTSE 100 records best performance since 2021
The FTSE 100 returned just 5.8 per cent in 2024, despite a last-minute selloff in the final weeks of December.
Despite hopes of a ‘Santa rally’ in December, the FTSE fell 1.7 per cent in the month.
However, this will be its best year since 2021. That year, the blue-chip index returned 14.3 per cent, followed by a 0.9 per cent rise in 2022 and a 3.8 per cent rise last year.
After soaring to an all-time high on 15 May, on the back of rate cut expectations, the FTSE 100 languished at around 8,200 in the year’s second half.
While there were hopes that London’s main market would recreate this success in the summer, they were quickly dented by fears of a US recession that emerged at the start of August.
A raft of poor economic data and middling results from the Magnificent Seven sent markets worldwide into a tailspin during the summer.
While most markets, especially the US, quickly recovered, the FTSE 100 has been weighed down by higher-than-expected inflation and struggling economic growth.
“UK performance pales in comparison to returns seen in tech-dominated markets across the pond,” said Matt Britzman, senior equity researcher at Hargreaves Lansdown.
“It played second fiddle to the tech-fuelled US markets, where AI excitement sent the S&P 500 soaring,” he added.
The FTSE 100 then saw another drop amid Budget speculation in November, hitting its lowest since April in the week following the fiscal event.
This also contributed to the worst performer of any UK index, the FTSE AIM 100, which fell more than six per cent throughout the year, hitting a 52 week-low only yesterday.
This is largely due to the Budget’s imposition of inheritance tax on AIM shares, with speculation over the levy causing the index to fall almost seven per cent throughout the third quarter.
Meanwhile, the more domestically-focused FTSE 250 grew 5.7 per cent, hitting its highest point since February 2022 during the summer.
“After the turbulence of 2023, we’ve seen a marked shift towards growth, driven by stabilising inflation and a more positive outlook for interest rates,” added Tom Stevenson, investment director for personal investing at Fidelity International.
“US equities have led the way, delivering 28.5 per cent year-to-date return, up from 14.8 per cent in 2023, fuelled by a tech-rally, stronger-than-expected corporate earnings and optimism around AI-driven growth.”