Barclays Analysts Predict Strength in FTSE 100’s ‘Old World’ Commodity Giants”
“Traditional commodity giants have long been viewed as a weakness for the FTSE 100, but Barclays analysts argue there are compelling reasons why this perception may soon shift to a strength.
Global equity markets have experienced significant growth in recent times, driven largely by tech companies.
While major indices like the S&P 500, Nasdaq, DAX, and CAC have all posted notable gains this year, the FTSE 100 has seen more modest growth due in part to challenges faced by mining firms amidst China’s economic issues.
However, if ongoing global economic uncertainties lead to supply shocks and geopolitical tensions, the FTSE’s heavy exposure to commodities and defensive sectors could become an advantage.
Barclays’ Head of European Equity Strategy, Emmanuel Cau, sees potential for the FTSE 100 to serve as a hedge against stagflation, particularly amid geopolitical and supply-related risks.
Barclays has also revised its Brent crude price forecasts upward, reflecting a more positive outlook for both supply and demand dynamics.
Cau highlights Brexit as another factor favoring increased investor exposure to the FTSE 100. Improved UK-EU relations and potential policy changes post-elections could reduce Brexit-related market risks.
Beyond Brexit, Cau points to factors such as attractive valuations, increased M&A activity, buybacks, and evolving savings reforms as additional drivers for potential FTSE 100 performance improvements in the medium term.
