FTSE 100: Financial Times Stock Exchange 100 Index, Stock Index of 100 Companies with the Highest Market Value Traded on the London Stock Exchange
FTSE 100 is the London Stock Exchange index, which stands for “Financial Times Stock Exchange Index”. FTSE 100, which we know as Footsie for short, is an index of the 100 largest companies with the highest and weighted market values traded on the London Stock Exchange. Companies in the FTSE 100 index represent 80 percent of the UK economy.
Although predominantly UK-based companies, the Footsie index is a global index. It generally follows indices in Europe. While evaluating the FTSE 100, it is necessary to monitor the movements of other European stock markets.
The sum of the companies belonging to the mining and oil sectors in the index constitutes 30% of the index. Therefore, the change in commodity and oil prices is very effective on the FTSE 100 index. Therefore, BP, Petrofac oil companies, Royal Dutch Shell, BG Group, Tullow Oil, which is included in the FTSE 100 index, is the determining companies in the direction of the index as they are much more sensitive to the developments in the Middle East.
FTSE 100 Stocks
Other influential companies in the FTSE 100 index are in the banking or communications industry. Other companies are world giants such as Barclays, BT, HSBC, Vodafone. These firms also produce consumer goods. The values in the Footsie index are the product of CFD (Contract for Difference). Values subject to positions and contracts are opened on the possible future values (futures) of the companies. If an investment is made in this stock market, instead of buying the share, expectations on the future price of the share are bought.
CFD trading provides great convenience to investors. It is possible to reach these products easily from all platforms with low collateral. The FTSE 100 index is one of the important indices of the forex market, and GBP pays for profits or losses on your transactions in this index. We know that the lowest level of the FTSE 100 index in the last ten years was $3443 in 2009 and the highest level was $7084 in 2015.
Companies Included in the FTSE 100 Index
They choose the stocks that will be included in the FTSE 100 index from among the shares they have determined as A or B group. The main criteria for selecting stocks in the Footsie index are the market values of the actual shares in circulation and transaction volumes. The point we need to pay attention to here is not to calculate the total values of the companies in the market, but only to calculate the market values in the section traded in the stock exchange.
They review the stocks on the London Stock Exchange in the periods they have determined and thus repeat the selections. There are 4 different evaluation processes for the stocks in the index. These periods are; January-March, April-June, July-September, October-December.
What Do You Need to Know About FTSE 100?
While the FTSE 100 components are entirely from UK-based countries, news from Europe also affects the index. UK news that has an impact on the index:
- Interest rate announcements
- UK manufacturing figures
- GDP statistics
- Inflation rates
Unlike the Japanese Nikkei index, the FTSE-100 generally follows European indices. When considering buying and selling the FTSE-100, it is important to watch carefully what other European markets are doing.
While FTSE 100 companies may be British companies, the majority of their revenue comes from outside the UK. Most companies report their profits in US Dollars rather than in Pound Sterling. This is a result of the global nature of the economy and can be seen in most major markets and indices.
The 5 oil companies listed on FTSE-100 and their stock values are much more affected by events in the Middle East. Moreover, 13 companies in the mining sector and their prices are also affected by events around the world. Changes in commodity prices may therefore affect FTSE-100 index. It is important to consider the various sectors that make up the index and the factors that can affect prices in certain sectors.