Stock indices: the UK market
The UK stock market is the oldest stock market in the world and remains the largest stock market in Europe, despite Brexit events. The main stock exchange of the UK, suprisingly, is the London Stock Exchange. Also, the UK stock market has a close relationship with the stock exchanges in Europe.
The main stock index of Great Britain is FTSE 100. FTSE 100 is the leading stock index of the London Stock Exchange, which includes 100 companies of Blue chips. The total capitalization of the FTSE 100 index represents 80% of the total capitalization of the London Stock Exchange. Also for the stocks included in this index there are strict rules, such as: trading on the London Stock Exchange, belonging to a certain state, the shares should be expressed in euros or pounds, and have high liquidity.
FTSE 100 chart
Also on the London Stock Exchange there are indices such as FTSE 250 and FTSE 350. The FTSE 250 is a less popular stock index, which includes shares with capitalization not included in the first hundred (FTSE 100), that is, with the capitalization from 101st to 350th, th place. The FTSE 350 is the lesser known stock index of the London Stock Exchange and combines the indices of the FTSE 100 and the FTSE 250. As a result, the FTSE 350 gives an idea of the overall dynamics of the entire London Stock Exchange.
Correlation of the UK index
Due to the specifics of the trading of some shares, namely the fact that shares with capitalization in the pound and euro are traded on the London Stock Exchange, the UK’s main stock index FTSE 100 has a high degree of correlation with the European stock indices.
FTSE 100 and EuroStoxx 50 (blue line) chart
Correlations of the UK’s main stock index and the GBP/USD pair are mostly negative, which is due to certain factors. Earlier, right up to the events of Brexit, this connection was direct.
GBP / USD and the stock index FTSE 100 (blue line) chart
As a result, the UK stock index FTSE 100, despite the current situation with the release of the UK from the EU, remains very significant not only for the British pound, but also for the European stock markets.
Anton Hanzenko