How will the FTSE 100 perform in 2017?

How will the FTSE 100 perform in 2017?

Despite 2016 being a year of high profile political shocks such as Brexit and Trump’s election, the FTSE 100 finished 2016 on an all-time high of 7,142 so should we take some comfort from that?

Well, according to Richard Stone, CEO of The Share Centre, Yes, we should. Richard states the fact that the stock market was able to put the aforementioned shocks into perspective and end the year with renewed confidence is certainly encouraging. It definitely indicates that there is confidence in the ability of the companies who make up the FTSE 100 and their potential to grow profits and deliver dividends and capital returns to investors.

The FTSE 100 has actually had its strongest year since 2013 and for investors who may have taken out an index, tracker or exchanged fund, would have seen their investment rise by over 14% which is phenomenal given that these are fairly cautious investment approaches. Bolder investors, especially those that may have entered the market at its lowest point, which was in February 2016, would have enjoyed returns of around 30% and received a dividend income as well!

So, can we expect more of the same in 2017?

We all know that you can’t rely on past performance as an indicator of future performance but history does tell us some things. In the past 30 years, the stock market has never seen losses in the years either side of a successful year. The FTSE experienced losses in 2014 and 2015 and 2016 has bucked that trend. This would suggest that 2017 may be another good year and, with the backdrop of weak sterling, low interest rates and fiscal loosening both in the US and UK, the signs are encouraging.

It will be interesting to see how things pan out.