Barclays, Centrica, easyJet, Lloyds Banking Group, Morrison, Royal Mail, Sainsbury, Everybody in England, Scotland, Wales and Northern Ireland knows these and many more.
From Belfast to London, from Edinburgh to Cardiff, every subject of Her Majesty is familiar with these companies, which are all part of the FTSE 100 (Financial Times Stock Exchange), better known as the Footsie, possibly the most popular and widely traded index in the world today.
Maybe some of you will be thinking: how can it be? Well, this index represents 80% of the market capitalization within the London Stock Exchange (LSE). A Joint venture between the LSE and the Financial Times, the FTSE is the only index not part of any Stock exchange.
The FTSE 100 is a share index of 100 companies listed on the LSE, weighted by market capitalization, and is managed by the FTSE group. As markets open this index is updated and published every 15 seconds. A portion of the FTSE 100 is also made up of other global companies, and it is a mistake to use it as the only indicator of the state of the UK’s economy.
FTSE 100 Index composition
The companies that make up the FTSE 100 are determined quarterly, and formulated on the basis on their values that are taken after the close of business the night before. Should companies not make a certain grade they will be excluded and replaced with a new constituent that has made the grade.
This is a very important and crucial element for every company that wants to continue to be part of the FTSE 100. For this reason, every company must operate in the best way to stay in and strengthen the index values. Surely one reason more for traders to invest.
Factors that influence the FTSE index price
Even though most of the composites are UK based, news, political, economic shifts etc. that occur in Europe will have a consequence on the index. Most announcements from the UK that do affect the FTSE are events such as: Interest rate announcements, GDP statistics, UK manufacturing numbers and inflation rates that have all to do with The United Kingdom.
While components of the Footsie may be made up of British companies (as mentioned) a lot of the FTSE’s revenue is generated from outside of the UK, such as the example of most economies like to publish their figures in USD (£) instead of the GBP (£). Furthermore, the FTSE has 5 oil companies that are listed (BP, BG Group, Royal Dutch Shell, Petrofac and Tullow Oil), and their share values are mostly influenced by events that take place in the Middle East.
While, 13 of the world’s most popular mining industries are influenced by global events. Changes in the price of the commodity are influenced by all of the markets and the world’s events and this is important to keep in mind when embarking on trading the FTSE.
FTSE 100 Trading information
The FTSE 100 futures contract is tradable from 7:01 – 19:59 (GMT), Monday to Friday
The FTSE moves in increments of 0.50
The margin requirement for trading the FTSE is usually about 2% (i.e. 30:1 leverage) with most brokers
The minimum trade size is 1 index
The currency of the FTSE is the British Pound.