Where can the FTSE 100 go in the next 12 months? Here’s what the experts think
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2024 has been a great year for nurses FTSE 100. The UK’s flagship index is up 6% since the start of the year, but after including dividends, this return jumps to 9.4%. And if we go back a bit to the beginning of November 2023, investors have gained about 23.5%! For reference, historically, the index has typically only produced an annualized total return of around 8%.
But now that the FTSE 100 is up, is there still room for more growth? Or is the British stock market on the way to a cooling period with falling prices? Here’s what the experts say.
Forecasts are bullish
Despite the strong momentum seen so far, analyst projections seem more optimistic for the next 12 months. According to the latest price forecast from The Economy Forecast Agency, the most optimistic forecast for the FTSE 100 over the next 12 months is 9,888 points, and the most pessimistic is 8,594 points.
In terms of returns, that’s a potential profit of between 5% and 21% from today’s prices. And don’t forget about the additional 3.6% expected in dividends based on current earnings.
| Prediction | The lowest | The highest | Average | Average Return |
| 3 months | 7,325 | 8,427 | 7,876 | -3.8% |
| 6 Months | 7,631 | 8,779 | 8,205 | +0.3% |
| 9 months | 8,131 | 9,355 | 8,743 | +6.8% |
| 12 months | 8,594 | 9,888 | 9,241 | +12.9% |
If we look at the forecast table, some weakness is expected in the next three months. This is not entirely surprising. Some comebacks after an amazing run are expected. However, there is a calendar effect to consider, when investment fund managers close positions to realize tax losses towards the end of the year.
But beyond this point, the FTSE 100 seems on track to continue its upward trajectory. There are many factors encouraging growth in employment, but arguably, the two most influential are the continued decline in interest rates and the expected high GDP growth following the government’s new Budget.
Taking a step back
It is important to remember that predictions are inherently flawed. They rely on a lot of assumptions that often don’t work out, making them blunt tools rather than accurate measurement tools. Therefore, investors may end up earning less than expected this time next year.
It is also important to remember that because the FTSE 100 is expected to rise, it may not be the same story for all its participants. looking at Rolls-Royce (LSE:RR.), the engineering titan has also delivered excellent performance of late. But the forecasts are becoming more conservative.
With much of its momentum rising driven by a recovering tourism market, growth in its Civil Aerospace division may slow down significantly. That’s because airlines have already started reporting a weak price zone.
Since most of the firm’s revenue comes from engine maintenance, fewer flying hours mean less demand for its services. To be fair, some of the group’s segments are performing admirably, especially Power Systems which is on track to deliver potentially explosive growth with its modular nuclear reactor technology by 2030.
However, until it grows into a meaningful revenue contributor, the business remains highly sensitive to air travel. So even if the FTSE 100 index rises, there is no guarantee that Rolls-Royce will follow.
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