It’s been a good 12 months for the FTSE 100 index. London’s premier benchmark has delivered a 7% achieve up to now. Many British traders, myself included, will hope for extra of the identical as 2025 attracts nearer.

Share costs of FTSE 100 corporations are decided by a myriad of things. Nevertheless, I believe these 4 are notably essential for the UK’s large-cap fairness market over the approaching months.

Let’s discover every in flip.

Rates of interest

Final month, the Financial institution of England reduce rates of interest to five%. Many Metropolis analysts are hopeful additional falls could possibly be coming. The Financial Coverage Committee subsequent meets on 19 September.

Usually, share costs of many FTSE 100 companies rise when rates of interest fall as borrowing prices tumble. Nevertheless, this isn’t true for all Footsie shares.

As an illustration, financial institution shares like Barclays, HSBC, and Lloyds, have a fancy relationship with rate of interest adjustments since web curiosity margins shrink when charges are decrease.

Fiscal coverage

Past evolving financial coverage, traders also needs to monitor fiscal coverage adjustments. The UK now has a brand new authorities. Chancellor Rachel Reeves’ first funds gained’t happen till 30 October, however we are able to count on hints concerning what may be in retailer.

Prime Minister Sir Keir Starmer has warned the general public that the funds “goes to be painful“. A £22bn black gap within the nation’s funds may result in some nasty tax adjustments for UK traders.

Capital positive factors tax (CGT) is within the authorities’s crosshairs. Any dramatic CGT will increase may harm FTSE 100 shares throughout the board.

This additionally signifies that making full use of the £20k annual Shares and Shares ISA restrict has arguably by no means been so enticing.

Please observe that tax remedy relies on the person circumstances of every shopper and could also be topic to vary in future. The content material on this article is offered for info functions solely. It’s not supposed to be, neither does it represent, any type of tax recommendation. Readers are answerable for finishing up their very own due diligence and for acquiring skilled recommendation earlier than making any funding choices.

Geopolitics

Ongoing wars in Ukraine and Gaza proceed to influence investor confidence. Most FTSE 100 shares are uncovered to those conflicts to some extent. Defence shares like BAE Methods are notably affected. It’s value keeping track of any developments on the battlefields.

As well as, the construct up to November’s US presidential election and any adjustments to the UK’s relationship with the EU in a post-Brexit world could have some bearing on FTSE 100 shares.

Pound sterling

All of the above components affect foreign money markets. Sterling has rallied in current months and its future course will influence the FTSE 100.

The Footsie tends to have an inverse relationship with the pound since many constituents are giant worldwide corporations that earn revenues in abroad currencies and report income in sterling.

A FTSE 100 inventory to contemplate

Unsure occasions can increase the attraction of defensive shares. One FTSE 100 firm with sturdy defensive credentials is pharma big AstraZeneca (LSE:AZN) since demand for healthcare merchandise stays strong all through all phases of the financial cycle.

Robust gross sales for the corporate’s most cancers and uncommon illnesses medicines have boosted the AstraZeneca share price and the long run potential of the agency’s pipeline appears spectacular.

The enterprise goals to generate $80bn in annual revenues by 2030. Moreover, the board has recognized a number of therapies that would produce over $5bn in peak 12 months revenues.

After all, medical developments aren’t assured. A doable share price correction could possibly be on the playing cards if the medication portfolio doesn’t reside up to expectations.

Nevertheless, general, I view AstraZeneca shares as a wonderful funding to contemplate.