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3 days ago
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The UK’s blue-chip stock index has recorded its strongest annual gain since 2021, despite lagging behind Wall Street over the past year.
The FTSE 100 index, which tracks the largest companies listed in London, posted a rise of 5.7% for 2024.
Having begun the year at 7,733 points, the FTSE closed 440 points higher at 8,173 points on 31 December.
That was its fourth year of gains in a row, after rising 14.3% in 2021, 0.9% in 2022 and 3.8% in 2023, which came in the wake of a 14.3% plunge in 2020, when the Covid-19 pandemic rocked markets.
But London’s lack of major technology companies meant it struggled to keep up with New York, where the S&P 500 gained more than 23% this year.
The year had begun strongly for the FTSE 100, which hit an all-time high of 8,474 points in May. But the second half of the year was less promising – it suffered a brief plunge in August amid global market mayhem, and then weakened in December as investors fretted that sticky inflation might dissuade the Federal Reserve from cutting US interest rates often in 2025.
The top FTSE 100 risers were British Airways owner IAG and engineering firm Rolls-Royce, which makes and services jet engines: both companies gained more than 90% during 2024. They were followed by NatWest bank, whose shares rose by 82%, and packaging firm DS Smith which gained 77% amid a takeover by a US rival.
“Air travel and holiday stocks have been flying high, with IAG and Rolls-Royce soaring to the top of the UK’s performance charts,” said Matt Britzman, senior equity analyst at Hargreaves Lansdown.
“Despite facing headwinds from rising costs, consumers seem determined to prioritise pleasure over prudence, proving they’re all-in on making memories – even when the budget’s tight,” Britzman added.
Bottom of the list was JD Sports, whose shares fell 42% this year, after the company bookended the year with profits warnings in January and November.
Another retailer, Frasers, was ejected from the FTSE 100 this year after its valuation fell, a fate that also befell building group Vistry, online grocery Ocado and fashion firm Burberry during the year.
America’s technology-focused Nasdaq Composite gained almost 30% during 2024, rising five times faster than the FTSE 100, which contains more old economy stocks such as banks, oil companies and miners.
The FTSE 250 index of medium-sized firms listed in London rose by 4.75% during the year.
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Most equity markets recorded gains for 2024, with both Japan’s Nikkei and Germany’s DAX rising by about 19%.
Lori Heinel, global chief investment officer at State Street Global Advisors, said: “2024 was no ordinary year, with elections around the world, persistent inflation and market volatility all playing their part in building an uncertain macroeconomic environment. Despite these challenges, markets continued to be resilient.”
MSCI’s index of global stocks rose by more than 17% during 2024, and jumped by 4.5% in November alone after Donald Trump won the US election, followed by a 2.4% drop in December.
“The euphoria about Fed rate cuts and Trump’s pro-business policies that dominated the market theme in November soon turned into caution,” said Raffi Boyadjian, lead market analyst at XM.
“The Fed may have slashed interest rates by a full percentage point in 2024 but the overriding message of its final policy decision of the year was that it will likely go on pause in early 2025, with traders eyeing May as the earliest possible meeting for a 25-basis-point rate cut,” Boyadjian added.
The US dollar had a strong year, with the pound dipping by about 1.6% to end the year about $1.253. Sterling rose more than 4% against the euro, to finish about €1.2066.
