FTSE 100

The FTSE 100 (pronounced 'footsie one-hundred') is the United Kingdom's flagship equity index, composed of the 100 largest companies by free-float market capitalisation listed on the London Stock Exchange's main market. Despite being widely interpreted as a 'UK economy index', the FTSE 100 is actually one of the most international large-cap benchmarks in the world: roughly 75-80% of the aggregate revenue of its constituents is earned outside the United Kingdom. The index is dominated by globally-diversified energy (Shell, BP), mining (Rio Tinto, Glencore, Anglo American), pharmaceuticals (AstraZeneca, GSK), consumer-staples (Unilever, Diageo) and banking (HSBC, Lloyds, Barclays) names.

This international revenue base produces the well-known 'weak-pound paradox': when GBP weakens against the US dollar, the FTSE 100 typically rises in sterling terms because the overseas earnings of its constituents translate into more pounds. Conversely, a strong pound caps the index. Traders watching the FTSE 100 alongside the GBP/USD exchange rate often see the two moving inversely on a day-to-day basis. For exposure to the genuinely-domestic UK economy, traders use the FTSE 250 (the next-tier mid-cap index) instead.

The FTSE 100 was launched on 3 January 1984 with a base value of 1,000. It replaced an older FT 30 index. The current name reflects a joint venture between the Financial Times and the London Stock Exchange — hence FT-SE — which was later acquired and operated by FTSE Russell, now part of London Stock Exchange Group. The index crossed 3,000 in 1993, 5,000 in 1998, 6,000 in 1999, 7,000 in 2015, and finally crossed 8,000 in early 2024 — a milestone that took 25 years longer than expected because of the index's high dividend payout and slow capital-appreciation profile.

Major drawdowns: dot-com bust 2000-2003 (-50%), Global Financial Crisis 2007-2009 (-48%), Brexit-referendum shock June 2016 (-8% in 2 sessions, recovered within a month), COVID-19 March 2020 (-35%). The FTSE 100 has typically lagged US large-caps over multi-decade horizons in capital-appreciation terms but has compensated with higher dividend yields (typically 3.5-4.5% vs. 1.5-2% for the S&P 500).

FTSE 100 constituents trade on the London Stock Exchange. The index level is calculated continuously during LSE cash hours. The ICE Futures Europe FTSE 100 futures (ticker Z) provides extended-hours price discovery. In IST:

Reading the FTSE 100 correctly requires holding the GBP/USD chart alongside. On any given day, decompose the FTSE move into: (a) the global risk move (correlated with S&P 500), (b) the GBP move (inversely correlated with FTSE), and (c) the commodity move (oil & metals are 15-20% of FTSE weight). A FTSE-up / GBP-down / oil-up day is the textbook 'weak-pound paradox' scenario. A FTSE-up / GBP-up / oil-flat day suggests genuine domestic conviction, which is rarer and usually signals a multi-week trend.

Sectorally, the FTSE 100's largest weights are: energy & materials (~22%), financials (~18%), consumer staples (~16%), healthcare (~13%) and industrials (~10%). Tech is under-represented (only ~1%), which makes the FTSE structurally an 'old economy' index versus the tech-heavy S&P 500 and Nasdaq.