The UK’s FTSE 100 has gained nearly 6% over 2024, having reached an all-time high during a year that saw the cost-of-living crisis ease, the Bank of England start cutting interest rates, and a new government take shape.
A “lack of enthusiasm” for London’s top stock market index nevertheless meant it lagged behind its US rival for another year, experts said.
The index gained nearly 440 points, or 5.7%, from the last trading day of 2023 to December 31 2024.
Signs of stronger investor confidence at the start of the year helped push the FTSE 100 to several all-time highs, peaking at a close of 8,445.8 on May 15.
The rally followed a spout of encouraging economic news for the UK, with official data estimating that the economy rebounded out of a recession in the first quarter of the year, and inflation retreating towards the 2% target level.
But the rally subsided over the second half of 2024, despite a landslide victory for the Labour party in July’s general election ushering in a period of political stability.
Markets analyst Michael Hewson said: “The performance since that record high has been symptomatic of the FTSE 100 over the years, a brief pop to new highs and then the rally fizzles out and the index slips back into a range again.”
He added that despite the overall gains, the the UK stock market “appears to be suffering from a significant lack of enthusiasm on the part of global investors, especially when you look at its performance relative to its peers”.
In particular, the S&P 500, the equivalent index in the US, soared by 25% this year – the same increase as 2023.
Gains were largely driven by the so-called “magnificent seven” technology stocks: Apple, Microsoft, Google’s parent firm Alphabet, Nvidia, Tesla, and Facebook owner Meta.
Meanwhile, France’s top equity index, the Cac 40, shaved about 2% off its value over 2024 with the country recently thrown into political turmoil when its government collapsed following a no-confidence vote.
But Germany’s Dax index gained nearly a fifth year-on-year, having surpassed the 20,000 mark earlier this month.
No-one seems interested in the UK equity market, other than to bash it for failing to attract more new flotations and the defection of some companies to other exchanges
AJ Bell
A group of analysts for AJ Bell said: “The UK stock market did lag that of the USA and many of its global peers once more in 2024, even as the Bank of England began to cut interest rates, the general election delivered a decisive result which could end the merry-go-round of incumbents in both number 10 and 11 Downing Street, and nearly 50 UK-listed firms acceded to takeover bids from home or abroad.
“No-one seems interested in the UK equity market, other than to bash it for failing to attract more new flotations and the defection of some companies to other exchanges (even if many global rivals suffered a similar dearth of new joiners in 2024).”
Nevertheless, a slew of takeover approaches during 2024 signalled more optimism among corporate buyers in UK-listed stocks.
There were more than 3,600 total deals this year involving a UK company being targeted by a buyer for mergers and acquisitions (M&A), totalling nearly 183 billion US dollars (£146 billion), according to data from the London Stock Exchange Group (LSEG).
This was 51% higher than in 2023, with the number of domestic deals – when one UK company buys another – doubling year-on-year.
A major domestic takeover included Nationwide’s £2.9 billion swoop for rival banking group Virgin Money, marking Britain’s biggest banking merger since the global financial crisis.
And the tie-up between housebuilders Barratt and Redrow, to form construction giant Barratt Redrow, boosted the real estate sector to second place in terms of deal values, LSEG found.
While one of the year’s biggest blockbuster deals was the takeover of cybersecurity firm Darktrace by US private equity group Thoma Bravo for almost 5.3 billion US dollars (£4.2 billion), taking it off the FTSE 100.
But while a number of UK-listed companies have been snapped up by buyers, others opted to move their primary listings to international markets, and a dearth of new companies floating on the London Stock Exchange persisted in 2024.
However, December saw French TV and film giant Canal+ launch its shares on the London Stock Exchange in one of the biggest new listings for the City in recent years.
“Darktrace, DS Smith and Hargreaves Lansdown are the subject of successful offers which will conclude in 2025, while Rightmove and Anglo American managed to fend off their predators’ advances,” AJ Bell said.