Britain’s top share index is set to rise nearly 13 per cent by the end of 2016 from current levels, according to analysts polled by Reuters in the past week, although the latest forecasts are sharply lower than those made just three months ago.
Strategists cut forecasts for the commodity-heavy British share index because of lingering concerns about the mining sector’s outlook following a slump in commodity prices, the likely start of a US rate hike cycle and uncertainties about whether Britain will leave the European Union.
A Reuters poll of nearly 40 traders, fund managers and strategists gave a median forecast for the benchmark FTSE 100 index of 6,250 points by the end of 2015, 6,400 points by mid-2016 and 6,700 points by the end of next year.
In early October, a poll produced a median forecast for the FTSE 100 to end 2015 at 6,500 points, rising to 6,700 by June 2016 and advancing to 6,989 by the end of 2016.
“I am cautiously optimistic for 2016. We have got some tailwinds like an encouraging economic climate and improving consumer spending, but the FTSE 100’s heavy reliance on commodities and ‘Brexit’ concerns could limit its gains,” Securequity senior trader Jawaid Afsar said.
A poll forecast Britain’s economy would produce solid growth next year, although the outlook was also clouded by doubts over Britain’s EU membership.