"The FTSE 100 continues to outpace America's Dow Jones Industrials, NASDAQ and S&P 500 indices in 2025, as it stands near all-time highs of its own, despite nagging worries over the UK's economic and political outlook, the possible impact of American tariffs upon global growth and ongoing military conflict in both Eastern Europe and the Middle East."
"The UK stock market has long been less highly valued than its American counterpart, for a multiplicity of reasons, but the gap is still high by historic standards. The USA trades on 25 times forward earnings for 2025, according to research from S&P, while aggregate consensus analysts' forecasts for the FTSE 100's constituents put the British benchmark on 15.4 times."
"However, that multiple is not far off long-term averages for the FTSE 100, thanks to its march to new all-time peaks, and that capital gain, combined with further modest downgrades to dividend payment estimates, means the forward yield is also less attractive than before, at some 3.3% for 2025. That said, share buybacks continue to supplement that figure quite handily."
FTSE 100 outpaces US indices in 2025 and sits near its own all-time highs despite concerns about the UK economy, potential US tariffs and military conflicts in Eastern Europe and the Middle East. Lower Bank of England interest rates could support UK equities if inflation recedes. Investors seek diversification away from US market concentration in AI-related stocks, political unpredictability and high valuations, while dollar weakness affects US-heavy portfolios. The US trades on about 25 times forward earnings for 2025, versus roughly 15.4 times for the FTSE 100. Forward yield for the FTSE 100 falls to about 3.3% for 2025, with share buybacks and £50.9 billion declared buybacks plus forecast dividends of £79.4 billion and a special dividend from Admiral supplementing returns.
Read at London Business News | Londonlovesbusiness.com
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