After a turbulent year for equity markets, where will the FTSE 100 end up by the end of 2016?

Nick Peters is portfolio manager at Fidelity Solutions, says Yes

Overall, one can paint a relatively supportive economic picture for the UK. Wage growth is now outstripping inflation and is likely to continue doing so, given low levels of unemployment. This should help to support consumer demand, though this is admittedly more important for the more domestically focused FTSE 250. But the path for UK equities is by no means smooth. With Britain’s referendum on the EU due to be held by the end of 2017, there is a strong chance that it could happen next year. Referendums are unpredictable (see Scotland’s of 2014) and we are likely to see at least some market volatility. So although UK equities could do well, it could be a bumpier journey. For FTSE 100 investors, I think it’s more important to have active exposure which can selectively choose opportunities, rather than the broad index, which will simply be the average performance of good and bad companies combined. Overall, however, I see the index remaining relatively stable, finishing within a similar range to where it currently sits.

Nicolas Ziegelasch is head of equity research at Killik & Co, says No

It’s been a mixed year for equities, with good performance from global equities. In 2016, we expect equities to show positive performance as we see a moderate pick-up in global growth, especially in Europe and Japan, and we expect the FTSE 100 to reach 6,750 by the end of 2016. With the US now having raised interest rates, there is the likelihood of divergent equity market performance, given the differing monetary policy across developed regions. In the UK, we expect earnings growth of around 6 per cent, although, like last year, it may be highly dependent on oil and gas and basic resources earnings, given the high weighting of the FTSE to these sectors. Our year end FTSE 100 forecast would leave the market on a forward price-to-earnings of 16x and a net prospective yield of 4.0 per cent. Themes we like for the year ahead include emerging markets and the far reaching effects of technological disruption on innovation, consumer patterns and industry dynamics.

Related articles