The FTSE 100’s 2023 performance was decidedly lacklustre compared to global markets, with a late rally barely pushing it into positive territory. Mid-caps suffered a similarly challenging year. Despite a surprise drop in inflation and some pre-holiday cheer from US Fed Chair Powell, high interest rates in the UK kept a leash on London markets while counterparts thrived.
FTSE 100 Top Performers
New CEO “Turbo Tufan” Erginbilgic’s turnaround plan revitalised Roll Royce (RR.L), transforming it from a “burning platform” to a growth prospect, making it the top FTSE 100 performer of 2023. Here is a list of the top 10 FTSE 100 performers with 1 Year Performance and current Price to Earnings (P/E) ratio.
| Rank | Company | Ticker | Gain (%) | Current P/E |
|---|---|---|---|---|
| 1 | Rolls Royce Holdings Plc | RR. | +224.18 | 152.87 |
| 2 | Marks & Spencer Group plc | MKS | +119.15 | 15.05 |
| 3 | 3i Group Plc | III | +81.08 | n/a |
| 4 | Sage Group plc | SGE | +56.08 | 36.64 |
| 5 | InterContinental Hotels Group plc | IHG | +48.70 | 31.99 |
| 6 | Associated British Foods plc | ABF | +48.63 | 16.71 |
| 7 | Centrica plc | CNA | +45.75 | 4.05 |
| 8 | Intermediate Capital Group plc | ICP | +44.13 | 17.09 |
| 9 | Taylor Wimpey plc | TW. | +41.67 | 7.70 |
| 10 | Howden Joinery Group Ltd | HWDN | +41.50 | 12.56 |
FTSE 100 Worst Performers
The falling commodity prices, missed production targets, global economic slowdown and overall investor sentiment contributed to Anglo American’s (AAL.L) share price. Here is a list of the bottom 10 FTSE 100 performers with 1 Year Performance and current Price to Earnings (P/E) ratio.
| Rank | Company | Ticker | Loss (%) | Current P/E |
|---|---|---|---|---|
| 1 | Anglo American | AAL | -39.45 | 5.08 |
| 2 | St James’s Place Plc | STJ | -38.47 | 9.12 |
| 3 | Fresnillo | FRES | -32.87 | 21.41 |
| 4 | Burberry Group Plc | BRBY | -31.03 | 11.47 |
| 5 | British American Tobacco plc | BATS | -30.53 | 6.12 |
| 6 | Entain plc | ENT | -25.22 | 16.36 |
| 7 | Croda International plc | CRDA | -24.63 | 18.65 |
| 8 | Beazley plc | BEZ | -23.01 | 25.37 |
| 9 | Diageo plc | DGE | -22.14 | 17.42 |
| 10 | Prudential plc | PRU | -21.76 | 11.13 |
Overall Summary
FTSE 100
The FTSE 100 eked out a modest gain of 0.9% in 2023, underperforming global markets. Sector performance was mixed, with Industrials, Consumer Discretionary, and Financials leading the way, while Technology, Healthcare, and Real Estate lagged.
FTSE 250
The FTSE 250 faced a more challenging year, declining 11.2% and underperforming mid-cap peers. Industrials, Oil & Gas, and Basic Materials were the top-performing sectors, while Consumer Services, Technology, and Healthcare struggled.
UK Economy
The UK economy experienced subdued growth of 1.2% in 2023 amid high inflation and interest rates. The unemployment rate remained relatively low at 4.1%, but inflation, while easing from its peak, stayed elevated at 3.7% in December. The Bank of England raised interest rates to 3.5% to combat inflation, which likely contributed to the muted performance of UK markets.
Global Markets
In contrast to the FTSE 100, major global indices enjoyed stronger gains in 2023. The S&P 500 surged 15.6%, the Euro Stoxx 50 rose 8.4%, and the MSCI Emerging Markets Index climbed 4.2%.
Key Events
2023 in the financial markets was a year of whiplash and surprises. Central banks, the usual stewards of stability, became the source of drama, with the Fed’s hawkish pivot igniting global inflation anxiety and triggering a flight to safety. The war in Ukraine cast a long shadow, disrupting supply chains and sending energy prices soaring. Meanwhile, unexpected events like the collapse of Silicon Valley Bank and the resurgence of COVID-19 in China kept investors on their toes. Through it all, resilience emerged, with technology stocks recovering from early stumbles and emerging markets bouncing back. As the dust settles, it’s clear that 2023 reshaped the financial landscape, leaving investors cautious but adaptable, ever watchful for the next unexpected event.
What can we expect in 2024 from FTSE 100?
Expecting the UK stock market’s 2024 performance is tricky. Optimism whispers promises of FTSE 100 exceeding 8,000 if earnings stay strong, inflation dips, and Ukraine tensions mellow. But potential interest rate hikes and economic wobbles could still tap-dance on investor confidence. Overall, it’s likely a “wait and see” year with the FTSE 100 favouring value picks and defensive sectors like financials and resources. Watch the Fed and global headlines; 2024 could be a steady two-step or an unexpected shuffle.
