With a possible Financial Service Authority review of the FTSE100 index, there are growing concerns in financial circles that the once solid market may begin to deteriorate. The FTSE100 is typically used as an economic benchmark by commercial lenders and other leading companies. When the index begins to drop, it has a dramatic effect on financial markets all around the globe. In the United Kingdom the FTSE100 dropped by three percent on Thursday, bringing its one-day decline to ten percent.
These worries come as the Bank of England begins to raise interest rates. Central bank officials and financial experts have been debating whether the Bank of England should raise rates earlier or later this year. Some argue that the early hike will help markets recover quicker, while others believe that the economy cannot handle another shock to the system. These worries have caused the FTSE100 index to fall on several occasions since its last big spike, but experts say this type of volatility is normal for the index.
With inflation concerns around the world, many investors have turned their attention to equities that do not face significant inflation worries, such as the FTSE100. The FTSE100 has not seen these types of inflationary pressures before, and analysts and traders say that they expect this pattern to continue. Even if the Bank of England decides to hike interest rates, most experts agree that the effects will be felt most significantly in the U.K.
Traders and investors are betting that the Bank of England will wait until at least the end of the month to decide on its next move. In doing so, they may be able to continue to benefit from the strong currency of the United Kingdom, as well as the strong economy. For now, the FTSE100 index futures market is holding strong. This means that traders can make money by making bets on the futures prices, with the potential for a profit if they predict that the Bank of England will raise interest rates.
Other financial markets aren’t quite as bullish, which means that there could be opportunities for investors that can earn even more money if they’re able to pick out the best ones in the market. The FTSE100 index futures market remains open for trading until July 12th. It will then switch over to the U.S. dollar/U.K. currency pair on the following day. Regardless of what happens during that week, traders should still expect strong economic indicators like employment figures and consumer spending data.
If the economic indicators remain strong, then the FTSE100 will likely appreciate in value. However, this isn’t necessarily a guarantee. Traders need to understand how different economic indicators affect the value of the FTSE100 index, as well as the overall British economy. Because of the global economy’s recent downfall, the U.K. has faced increasing amounts of uncertainty. With unemployment expected to rise in the coming months, more people are worrying about the direction their economy is headed. For those that can spot out the strong economic indicators and invest accordingly, the value of the FTSE100 can increase.
