FTSE 100 Analysis: Brexit, Covid-19, UK ETF, and Many More
Login

FTSE 100 Analysis: Brexit, Covid-19, UK ETF, and Many More

Estimated Reading Time: 3 minutes
Article Rating:
Based on 1 vote
Login to rate this article.

Azeez Mustapha

Updated:
The United Kingdom’s country-specific exchange-traded funds have traded considerably well since December, as investors across the globe have been pacified by the recent developments in the post-Brexit deal with the EU.

Since October last year, the currency-related Invesco CurrencyShares British Pound Sterling (NYSEArca: FXB) has grown by 5.6%, while the iShares MSCI United Kingdom ETF (NYSEArca: EWU) climbed by a whopping 27%.

The FTSE 100 (UKX) has grown by about 8% since December in dollar terms and has outperformed the S&P 500, the MSCI World, and the Euro Stoxx, despite the UK being one of the worst-hit nations by the COVID-19 pandemic.

Also, the FTSE 100 maintains a steep discount compared with other markets, with a forward price to earnings ratio of 15x. Meanwhile, the Euro Stoxx index and the SPX trade at over 18x and 23x, respectively.

In other news, the UK has successfully reached an agreement on its trade deal with the EU, eliminating previous uncertainty-induced price action. However, there’s still much to be discussed.

That said, as more investors flood back into British markets, many believe that the GBP could benefit significantly from the influx in demand for UK-based assets.

The Chief Economist at Toscafund Asset Management, Savvas Savouri, noted that the GBP’s fundamental value in euro is around €1.30 apiece, but remained depressed around €1.12 on Wednesday due to accumulated fears that Brexit would be costly and messy.

Savouri noted that “at some point, there will be a big transaction that will make FX traders wake up and realize the pound is undervalued,” adding that “we’ve gone through the quagmire of political uncertainty in a way that the U.S. and other European countries haven’t yet” in a recent interview with the Wall Street Journal.

In other news, CNN reported overnight that President-elect Joe Biden was considering distributing another stimulus package as large as $2 trillion. This should provide a significant boost to equity markets, including the FTSE.

However, strong gains in the index will likely get frustrated as European governments tighten coronavirus lockdown restrictions, as fears about the fast-spreading new COVID-19 strain first discovered in the UK.

Meanwhile, Italy—whose government is on the cusp of a collapse as political tensions heighten—plans to extend its COVID-19 restrictions to the end of April. The Netherlands plans to also extend its lockdown by at least three weeks, while France considers extending its nationwide-imposed curfew.

These are the factors currently driving the price dynamics in the FTSE 100 in the near and medium-term.

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$250 Min Deposit
9.8
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$50 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9

Learn to Trade

Never Miss A Trade Again

step 1
Signal Notification

Real-time signal notifications whenever a signal is opened, closes or Updated

step 2
Get Alerts

Immediate alerts to your email and mobile phone.

step 3
Entry Price Levels

Entry price level for every signal Just choose one of our Top Brokers in the list above to get all this free.

Share with other traders!

telegram
Telegram
forex
Forex
crypto
Crypto
algo
Algo
news
News