FTSE 100: A Complete Professional Guide to the UK’s Most Watched Stock Market Index
The FTSE 100 is one of the most searched financial keywords on Google today—and for good reason. It represents the heartbeat of the UK stock market and serves as a global benchmark for investors, traders, economists, and financial institutions. Whether markets are rising or falling, movements in the FTSE 100 often reflect broader economic sentiment not only in the United Kingdom but also across international markets.
This in-depth, professional guide explains what the FTSE 100 is, how it works, why it matters, and how investors can use it—written in clear, engaging English for readers of all levels.
What Is the FTSE 100?
The FTSE 100 (Financial Times Stock Exchange 100 Index) is the leading stock market index of the United Kingdom. It tracks the 100 largest publicly traded companies listed on the UK stock exchange by market capitalization.
The index is maintained by FTSE Russell, a subsidiary of the London Stock Exchange Group, and is widely regarded as the primary indicator of the health of the UK equity market.
Key Facts at a Glance
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Launched: January 3, 1984
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Base value: 1,000 points
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Market: London Stock Exchange
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Currency: British Pound Sterling (GBP)
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Constituents: 100 largest companies by market value
History and Evolution of the FTSE 100
The FTSE 100 was created to provide investors with a real-time snapshot of the UK’s corporate sector. Since its inception in 1984, the index has evolved alongside the British economy, surviving recessions, political change, and global financial crises.
Major Historical Milestones
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1987: Black Monday crash caused sharp declines
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2000: Dot-com bubble peak and collapse
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2008: Global financial crisis
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2016: Brexit referendum volatility
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2020: COVID-19 market crash and recovery
Despite periods of turbulence, the FTSE 100 has shown long-term resilience, supported by the global reach of its constituent companies.
How the FTSE 100 Is Calculated
The FTSE 100 is a market-capitalization-weighted index, meaning companies with higher market value have greater influence on the index’s movement.
Calculation Basics
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Market Cap = Share Price × Number of Shares
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Only free-float shares (publicly available) are counted
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Larger companies like Shell or HSBC influence the index more than smaller ones
This method ensures the index reflects real market conditions, rather than treating all companies equally.
Quarterly Review and Index Changes
One unique feature of the FTSE 100 is its quarterly reshuffle, conducted in:
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March
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June
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September
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December
Companies can be promoted or relegated between the FTSE 100 and FTSE 250 depending on their market capitalization ranking.
Why This Matters
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Promotions often boost share prices due to increased demand
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Demotions may lead to selling pressure
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Active traders closely watch these reviews
Major Companies in the FTSE 100
The index includes globally recognized corporations across multiple sectors.
Prominent FTSE 100 Companies
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Shell
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HSBC
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BP
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Unilever
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AstraZeneca
Many of these firms earn most of their revenue overseas, making the FTSE 100 highly sensitive to global economic trends.
Why the FTSE 100 Is Globally Important
Although it is a UK-based index, the FTSE 100 is international by nature.
Key Reasons for Global Influence
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Over 70% of revenues come from outside the UK
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Strong exposure to commodities, banking, and pharmaceuticals
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Acts as a hedge against a weak pound
When the British pound falls, multinational FTSE companies often benefit—making the index attractive to international investors.
FTSE 100 and the British Economy
The FTSE 100 is often seen as a mirror of investor confidence, though it does not always perfectly reflect the domestic UK economy.
Relationship with the Economy
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Rising FTSE 100 → positive market sentiment
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Falling FTSE 100 → uncertainty or global risk-off mood
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Strong index performance does not always mean strong local economy
For domestic economic analysis, some analysts prefer the FTSE 250, which is more UK-focused.
FTSE 100 vs Other Global Indices
| Index | Country | Focus |
|---|---|---|
| FTSE 100 | UK | Large-cap multinational firms |
| S&P 500 | USA | Broad US economy |
| DAX 40 | Germany | Export-driven industrial firms |
| Nikkei 225 | Japan | Manufacturing & technology |
Compared to tech-heavy indices like the NASDAQ, the FTSE 100 is more defensive, with strong exposure to energy and consumer staples.
How to Invest in the FTSE 100
Investors can gain exposure to the FTSE 100 in several ways.
1. Index Funds & ETFs
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Track the index directly
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Low cost and diversified
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Ideal for long-term investors
2. Individual Shares
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Buy shares of FTSE-listed companies
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Requires research and active management
3. CFDs & Spread Betting
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Used by short-term traders
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Higher risk, leveraged exposure
4. Pension & ISA Accounts
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Tax-efficient UK investment options
Advantages of Investing in the FTSE 100
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High dividend yields
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Global revenue exposure
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Strong, established companies
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Defensive during economic downturns
Risks and Challenges
No investment is without risk.
Key Risks
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Currency fluctuations (GBP volatility)
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Heavy reliance on commodities
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Lower growth compared to tech-heavy markets
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Political uncertainty (elections, regulation, trade policy)
FTSE 100 and Currency Movements
One unique feature of the FTSE 100 is its inverse relationship with the British pound.
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Weak GBP → FTSE 100 often rises
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Strong GBP → FTSE 100 may fall
This makes the index particularly interesting for forex and macro investors.
Current Trends Driving FTSE 100 Searches on Google
The surge in Google searches for “FTSE 100” is driven by:
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Global interest rate changes
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Inflation and central bank policy
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Energy price volatility
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UK political developments
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Earnings reports from major firms
Retail investors are increasingly tracking the index for daily market direction and investment signals.
Future Outlook for the FTSE 100
The long-term outlook for the FTSE 100 remains stable but selective.
Growth Drivers
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Energy transition investments
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Pharmaceutical innovation
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Global consumer demand
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Dividend-focused strategies
While it may not deliver explosive growth like emerging tech markets, the FTSE 100 remains a reliable income-generating index for conservative investors.
Final Thoughts
The FTSE 100 is far more than just a number—it is a powerful indicator of global corporate performance, investor sentiment, and economic direction. Its international exposure, strong dividends, and defensive structure make it a cornerstone of many investment portfolios worldwide.
For anyone searching Google about the FTSE 100 today, understanding this index is essential—not only for investing, but for grasping how global markets truly work.
