It’s rather refreshing to see the FTSE 100 surge after the difficult few years we’ve had. As I write, the UK’s leading index sits at 7,975.89 points, just shy of the 8,000-point mark and 0.9% off its all-time high.
It’s very difficult to predict how markets will perform, especially in the current economic environment. Any sign of a delay in interest rate cuts could see them throw a tantrum. On the other hand, it’s been touted that we could be in line for cuts as soon as May.
That’s partly what’s been driving the Footsie higher. If it comes to fruition, it’s possible that we’ll see it hit an all-time high in 2024.
But where exactly will it finish the year?
My prediction
Quite frankly, that’s anyone’s guess. The FTSE 100 is up 3.3% year to date. If it were to do 5% from here that would leave it at 8,374.68. A 10% rise would price it at 8,774.48.
I think somewhere between that is realistic. However, it’s dependent on plenty of factors and I could be wrong. As I highlighted earlier, action around interest rates will heavily dictate performance. Bank of England boss Andrew Bailey has called it “reasonable” for investors to be pricing in three cuts this year. That’s a positive.
There are also factors such as inflation to consider. While it seems to be falling, any signs of it rising again could throw a spanner in the works.
One to watch
But even with current macroeconomic uncertainty, I’m expecting the Footsie to continue trending upwards this year. And there are a few stocks I see helping push the index higher. Barclays (LSE: BARC) is one.
The Blue Eagle bank has been on a tear so far this year. During that time, it’s climbed a whopping 21.9%. I think it’s got a lot more to go.
I say that because its shares look dirt cheap. They’re trading on just 7.1 times earnings. Put that alongside its 4.2% dividend yield and the stock looks even more enticing.
Its powerful performance has been driven by its 2023 results. The bank capitalised on higher interest rates, which boosted margins. However, what I was most impressed with was its plans for a £2bn cost-cutting mission in the years to come.
In its latest update, CEO CS Venkatakrishnan told investors of the firm’s new three-year plan, which aims to “further improve Barclays’ operational and financial performance”. As part of this, it’s targeting £2bn of gross efficiency savings by 2026.
The business will face challenges in the months to come. The banking industry is volatile at the moment. Barclays also took a £900m hit in the fourth quarter relating to restructuring costs.
However, I’m confident this will pay dividends in the years to come. I own Barclays shares. With any cash, I’m keen to add to my position.
Looking at the bigger picture
I’m optimistic that the FTSE 100 has further to go this year. What also excites me is the long-term potential of UK stocks. A number of shares look severely undervalued right now. The index is trading on an average of 11 times earnings. That’s below its historical average of 15.
Alongside Barclays, I’ll be shopping for other bargains too.
The post Here’s where I think the FTSE 100 could end 2024 appeared first on The Motley Fool UK.
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Charlie Keough has positions in Barclays Plc. The Motley Fool UK has recommended Barclays Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
