Volatility Leads To Pessimism Around UK's FTSE 100 Index

During the past few weeks, the FTSE 100 index, which consists of the stocks of the 100 most prestigious and well-established large corporations listed on the London Stock Exchange, has been somewhat volatile.

The foray into the new year so far has been a far cry from the same period last year, when euphoria among investors and analysts alike abounded during February 2023 due to London's long-established index having surpassed the 8,000 point mark for the first time in history.

Here we are now in February 2024, and things are somewhat different.

As trading begins for the new week ahead, there is a pessimistic tone to many analyses relating to the performance of the FTSE 100, especially compared to other indices comprising stocks listed on other globally recognised premium venues.

The overall performance of the FTSE 100 index since the beginning of 2024 has included a series of upward and downward movements; however, as this week began, the index was valued at 7,583 points as depicted by the bottom of the candlestick at 9.00 am UK time, according to the FXOpen chart, which is considerably lower than a top value of 7,711 on February 7.

Overall, the FTSE 100 index has fallen 1.93% so far this year, therefore demonstrating its weaker performance compared with last year's stellar gains, which pushed it over the 8,000 milestone, as well as a weaker performance compared to gains made by other indices, including North America's NASDAQ 100 and S&P 500.

Opinions vary on the reasons for London's losses at a time when New York's indices have been gaining, and an interesting indication is the current favour for all things AI. America's stock exchanges, especially the NASDAQ exchange, are populated with tech giants and led by the 'Magnificent 7' stocks, which are giant internet, enterprise software, and e-commerce titans compared with London's more traditional bricks-and-mortar firms, some of which have hundreds of years of history behind them.

It is, of course, difficult to know whether the current focus on AI to the extent that it is a central talking point at most conferences among large corporations as well as senior government officials around the world will actually amount to being 'the next big thing' as this is an infancy stage, however if the FTSE 100's losses compared to New York's gains appear to add some credibility to the notion that tech firms are being bolstered by the global infatuation with AI.

By contrast, there is talk of stagnation in the British economy, which could be plaguing the FTSE 100 firms, but overall there is no recession or significant difference between Britain and its Western neighbours across the Atlantic in terms of overall economic circumstances - all Western nations have employed similar central bank strategies over recent years, and all Western nations have adhered to a similar geopolitical agenda; therefore there is nothing specific to the backdrop of the nation that could have caused the FTSE 100 index to be so volatile and create an overall loss so far this year.

This in itself is a reason to watch it carefully!