What Moves the FTSE 100? Key Factors & Trading Insights 2025

The FTSE100 (UK100) comprises the 100 largest companies on the London Stock Exchange.

The number of points that indicate the value of the FTSE100 is compiled by measuring the values of the London Stock Exchange's largest 100 companies. These companies' share values are weighted and calculated to give traders an accurate snapshot of the index.

TL;DR

• The FTSE 100 (UK100) tracks the 100 largest companies on the London Stock Exchange.
• Company weightings are based on free float-adjusted market capitalisation.
• Top companies include AstraZeneca, HSBC, BP, GSK, and Unilever.
• Influencing factors: global economy, interest rates, currency shifts, political events, and commodity prices.
• Quarterly reviews determine inclusion/removal based on market cap rankings.
• Brexit introduced uncertainty due to unclear trade and employment policies.

What Are the Top FTSE100 Companies?

FTSE100 companies are chosen based on their free float-adjusted market capitalisation, representing the total value of their openly traded shares.

If a company has shares that are intended for board members or other individuals and are not traded publicly, they do not count towards this valuation. The largest companies on the FTSE100 are:

What Moves the FTSE100's Price?

A broad range of economic, political, and market-specific factors influences the FTSE 100 index. Key drivers include:

• Global Economic Conditions: Since many FTSE 100 companies operate internationally, the index often reacts more to international economic trends and geopolitical events than UK-specific developments.
• Currency Movements: Around 70–75% of FTSE 100 revenue is generated overseas. A weaker British pound typically boosts the index by increasing the value of foreign earnings when converted to sterling, while a stronger pound can have a dampening effect.
• Interest Rates and Monetary Policy: Decisions by central banks, especially the Bank of England, influence borrowing costs and consumer demand. Higher interest rates usually lower the index, though financial stocks like banks may benefit.
• Corporate Earnings: Earnings reports from large companies within the index can significantly affect its value, notably when results beat or miss market expectations.
• Commodity Prices: The index includes major oil, mining, and resource firms. Rising commodity prices, especially for oil and metals, tend to lift these stocks and support the overall index.
• Political Developments: Events such as elections, referendums, and policy changes can create uncertainty or optimism in markets, shaping investor sentiment and index performance.
• Macroeconomic Indicators: Economic data such as GDP growth, inflation, and employment levels influence market confidence and expectations about future economic conditions.
• Sector Performance: Shifts in key sectors like financials, energy, and healthcare can disproportionately impact the index due to its capitalisation-weighted structure.
• Global Market Trends: Broader movements in international stock markets, especially during global volatility or economic stress periods, often ripple into the FTSE 100.

These interconnected factors make the FTSE 100 a dynamic and responsive indicator of both UK and global economic health.

FTSE 100 Performance History: Key Milestones, Crashes, Recoveries

Key Milestones

• 1984: The FTSE 100 was launched on January 3, starting at a base value of 1,000 points.
• 1999: Hit a then-record high of 6,930.20 on December 30, fueled by the dot-com boom.
• 2015–2017: Surpassed the 7,000-point mark for the first time.
• 2023: Broke through the 8,000-point level in February, driven by strong energy sector performance amid global uncertainties.
• 2024–2025: Continued to set new records, closing above 8,100 in 2024 and maintaining strength despite economic headwinds.

Major Market Crashes

• 1987 – Black Monday: On October 19–20, the index dropped 10.8% and 12.2%, respectively, its steepest single-day loss until 8 July 2025.
• 2000–2003 – Dot-com Collapse: Following its 1999 peak, the FTSE 100 plunged over 40% by 2003.
• 2008 – Global Financial Crisis: Suffered a 31% annual decline, marking its worst performance since inception.
• 2016 – Brexit Vote: Saw a sharp but short-lived dip after the UK decided to leave the EU.
• 2020 – COVID-19 Crash: Plummeted over 30% in March, including an 11% one-day drop on March 12, rivalling Black Monday losses.
• 2024–2025 – Trade War and Tariff Concerns: Fears of global trade disruption triggered significant declines in mining and banking stocks, leading to notable sector-wide pullbacks.

Notable Recoveries

• Late 1980s–1990s: Rebounded steadily after the 1987 crash, reaching new highs in the 1990s.
• 2003–2007: Staged a solid comeback from the dot-com downturn, crossing the 6,000-point level by 2007.
• 2009–2015: Recovered from the financial crisis, eventually breaching 7,000 points.
• 2021–2023: Bounced back from pandemic lows, reaching all-time highs above 8,000 in 2023.
• 2025: Outperformed many global indices with a nearly 20% return over 12 months, supported by gains in defensive sectors and a shift toward value stocks.

The FTSE Post-Brexit

The FTSE 100 experienced a sharp drop immediately after the 2016 Brexit referendum but quickly rebounded, showing resilience amid years of market volatility and investor uncertainty between 2016 and 2020.

During this period, UK equities underperformed global peers, with significant outflows and a weaker pound dampening investor sentiment. However, from 2020 onward, the index demonstrated steady recovery, achieving a 6.3% compound annual return, supported by its constituents' international exposure.

By 2025, the FTSE 100 reached record highs above 8,400 points, with forecasts suggesting it could surpass 9,000 by year-end, driven by strong performance in financials, oil and gas, and consumer goods, along with high dividend yields.

Overall, improved investor confidence, regulatory changes expanding index composition, and a more stable macroeconomic environment have contributed to renewed optimism, with most market participants expecting continued gains through the end of 2025.

How Do Companies Get onto the FTSE 100?

The London Stock Exchange Group's board members, whose offerings include the FTSE 100, 250, and others, meet quarterly to review company standings and market valuations.

In order to qualify for this prestigious listing, companies must have a market capitalisation that would place them as the 90th company or better. If they reach this mark, they will be automatically added to the composite.

In order to maintain consistency and continuity, a company will not be automatically removed until it reaches the equivalent of the 111th position. If this happens, it will be placed on the FTSE250 (LSEG's largest 250 companies) listing, assuming it has enough market capitalisation to justify the placement.

For example, Company A's value puts it in the 110th position on the listing. At the same time, Company B's value has grown from not being on the composite to having a value that qualifies it for the 90th position.

During the LSEG's quarterly evaluation meeting, they will decide to add Company B to the FTSE100, effectively bumping Company A down to the 111th position. This will give it a nice placement on the FTSE250 but remove it from the FTSE100.

The FTSE100's movements reflect the day's trading activity among its largest 100 companies. This number, which changes daily, keeps some traders on their toes, as the index can still rise, even if some of its companies fall (and vice versa) due to how it is weighted.

How Does Brexit Affect the FTSE100?

The outcome of Brexit relied on the ability of the UK and EU governments to reach an agreement on taxes, trade, and various other issues. These agreements would allow the UK to regain a higher level of independence while continuing to trade freely with Continental Europe.

While these economic zones will still be free to trade with each other, government policies are not clear. How will electronic safety be monitored? What will the tax rates be? And most importantly, can companies retain their foreign workers who once were able to work in the UK because of their European Union citizenship?

These are only a few questions that traders need to consider, but the biggest factor in Brexit is its inherent instability due to a lack of intergovernmental agreement.

Conclusion

The FTSE 100 remains one of the most vital barometers of UK and global market health. The index offers investors a balanced view of market movements by tracking the largest publicly traded companies and adjusting their influence based on market capitalisation. Influenced by a complex mix of local and international factors, the FTSE 100 is dynamic and ever-evolving, making it essential for traders to monitor regularly. Whether you're watching corporate earnings, geopolitical shifts, or currency movements, understanding the FTSE 100 helps you make more informed investment decisions.