After the FTSE 100 breaks records in April, can it soar even higher in May?
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On 30 April, the FTSE 100 hit a brand new document of 8,200 factors. It beat the earlier excessive of 8,189 factors, set only a day earlier.
Has investor confidence lastly returned to the UK inventory market? We’re nonetheless in early days. However the newest outcomes we’ve been seeing from high firms have been principally constructive.
I need to take a look at two of the UK’s favorite Footsie shares.
Financial institution on Barclays?
Q1 earnings from the financial institution sector had been down, as anticipated, however not too dangerous. And the outlook appears more and more vivid.
I’ll choose Barclays (LSE: BARC) for a couple of causes. Not least as a result of the share worth has climbed 33% thus far in 2024.
There’s one most important purpose I believe Barclays may be a greater barometer of UK market sentiment than, say, Lloyds Banking Group. And that’s as a result of it nonetheless retains its worldwide funding banking arm, working within the US.
Worldwide focus
A fast take a look at the S&P 500 and the Nasdaq exhibits simply how bullish the US market is getting. With most of our FTSE 100 shares being actually worldwide in nature, I believe we have to look extra on the international image.
Even after the share worth rise thus far in 2024, the Barclays valuation nonetheless doesn’t take a look at all stretched. At the least, not on fundamentals. Forecasts put the inventory on a price-to-earnings (P/E) ratio of 6.5, with a 4% dividend yield.
Have buyers forgotten the dangers nonetheless confronted by banks this 12 months, hard-pressed by rates of interest? Possibly, however the bullishness does appear to be right here.
Rolls-Royce nonetheless rolling
The opposite common inventory I need to take a look at is Rolls-Royce Holdings (LSE: RR.)
The Rolls share worth has multiplied five-fold previously two years. And, simply when it regarded prefer it may be going off the boil in early April and set to fall, it picked again up once more.
A few of us had been ready for a share worth correction after such a surge. And I actually did count on to see shareholders taking some revenue off the desk now.
They’re nonetheless shopping for
But it surely seems to be just like the demand continues to be there. And that lends extra help to a key thought. That robust investor confidence might ship the FTSE 100 a good bit larger but in 2024.
What is going to occur to the Rolls-Royce share worth subsequent? On the one hand, the massive positive factors made previously couple of years might recommend falls in Could and past.
However I believe we might additionally make a case {that a} 2024 P/E of 28 continues to be good worth, with the expansion expectations that Rolls now enjoys.
FTSE 100 in Could?
So, the place may the FTSE 100 go in Could, and in June, and…?
Month-by-month actions don’t imply loads to a long-term investor. And we must always make our purchase selections based mostly on particular person inventory valuations.
However a whole lot of these nonetheless look low to me. Add in that rising investor sentiment, and I see a very good probability of extra inventory market positive factors in Could and past.