Skip to content

We want to clarify that IG International does not have an official Line account at this time. We have not established any official presence on Line messaging platform. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.
CFDs are complex instruments. 72% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

FTSE 100 outlook: is the forecasted rally over as index falls sharply?

The FTSE 100 has fallen today as investors await government stimulus. However, a positive outlook for housebuilding shares has eased the strain on the index.

FTSE 100 Source: Bloomberg

Despite a strong rally on Monday when the FTSE 100 rose to a fortnightly high, passing 6264, the blue-chip index had fallen over 100 points by mid-afternoon on Tuesday.

Although analysts thought that Monday’s resurgence was a sign that the FTSE 100 index had broken free from its previous June price levels, the further upside that appeared likely failed to materialise on Tuesday when investor confidence slumped.

IG offers extended hours trading options for the FTSE 100 index and other major indices. Buy long or sell short on the FTSE 100 via CFDs and other instruments provided by IG's market-leading trading solution. Start today by opening an IG account.

What is causing the FTSE 100 slide?

Although the index remains bullish for the quarter, investors remain spooked by government inactivity and consumer confidence remains weak. As a result, many investors are waiting for further government stimulus before investing in the blue-chip index.

The index’s retreat was led by hotels and restaurants group Whitbread, which was down 4.3% following the release of the company’s trading update. In addition to this, investors were also informed that footfall in shops this weekend was much lower than many people anticipated following the loosening of lockdown restrictions. Earlier in the day, the British Retail Consortium (BRC) announced that footfall in shops was down 49.6% year-on-year last week. However, this figure is a slight improvement on the 53.4% fall which had been announced the week before.

FTSE 100 company JD Sports Fashion raised alarm bells in this regard. Although the company reported a ‘very strong’ online performance, it warned that footfall in stores will remain uncertain for the foreseeable future. They announced that this will remain the case while Covid-19 continues to impact customer behaviour and social distancing measures continue to have an effect on smaller retail stores.

Will we see share prices rise and the FTSE 100 rally return?

In spite of Tuesday’s retreat, analysts and investors alike are still bullish about the index’s performance for the upcoming quarter, which is good news for speculators trading futures (currently, 67% of our investors are going long on the market).

Tomorrow, Chancellor of the Exchequer Rishi Sunak is due to deliver his summer statement and outline his big spending announcements for the next six months. If further stimulus measures are announced and Mr Sunak is able to boost consumer demand, then investor confidence may return.

Similarly, many hope that housebuilders could give the FTSE 100 a lift. Following their trading update on Monday, Barratt Developments saw their share price rise by 3.1%, while fellow FTSE 100 companies Persimmon (1.2%) and Berkeley Group (0.4%) also saw their share prices rise.

For the FTSE 100, this is significant news. If housebuilders are once more able to build, then activity levels may bounce back strongly in the market and the FTSE may be forced higher. Early signs of such a trend are already apparent. In June, mortgage enquiries were up 100 per cent compared with May, and transaction volumes also rose sharply when compared with previous months. So, even with the FTSE 100 failing to make any ground today, housebuilding shares continued to offer some hope for the index and for investors who are speculating on the longer-term trends of the market.

Housebuilding is one area of the economy where Mr Sunak may also be able to provide a further boost. Although the industry is already rebounding, some experts have called for a suspension of stamp duty to further fuel investor demand.

Currently, there’s speculation that Mr Sunak may raise the stamp duty threshold or announce a ‘stamp duty holiday’ in his statement. Although many believe the changes will only be temporary (perhaps lasting for six months), this will end uncertainty and fuel market demand. It will also help the government meet Prime Minister Boris Johnson’s promise that Britain will ‘build, build, build’.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing
Find out more

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.