Investment managers expect the FTSE 100 to remain almost flat by the end of the year as political negotiations give stocks a bumpy ride, according to a poll published today.
The survey of more than 30 fund managers, brokers and analysts published today by Reuters predicted London's blue-chip index will close the year at 7,800 points, a rise of less than two per cent from the index's level at the time of writing.
The UK's benchmark index will lag behind the rest of Europe, represented by the Euro Stoxx 50, which respondents to the poll expected will rise by over five per cent.
The FTSE 100 hit its latest record close only this month, as investors greeted signs that the US may not pursue restrictive trade measures.
However, the run-up to the UK's formal exit from the EU in March 2019 and the transition period will hold back gains for big firms, the poll found, with a gain of only 100 points expected during the first six months of 2019 and then a retreat by the end of that year.
Brexit formally takes place at the end of March 2019, with the UK then entering into a two-year transition period in which trading conditions are planned to remain mostly unchanged.
However, during that period the UK will also be negotiating the longer-term deal with the EU. Sterling has been highly sensitive to the negotiations, with major implications for the multinationals which make up the FTSE 100. The FTSE 100 has been boosted by the weakness of the pound, which boosts the reportable value of its foreign currency earnings.
The value of the pound remains nine per cent below its level at the start of June 2016, according to the Bank of England's trade-weighted index.