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After reaching report highs in Might this yr, development within the UK inventory market has tapered off. The FTSE 100 virtually fell again under 8,000 factors earlier this month (November) after the October Price range and US election shook issues up.
With a number of new insurance policies affecting markets each at house and overseas, what’s in retailer for traders subsequent yr?
To reply that query, I sought the knowledge of specialists from the UK and the US.
S&P 500 outlook
Donald Trump’s commerce tariffs are anticipated to ship rates of interest hovering, which may damage US shares. As such, most analysts don’t anticipate robust development subsequent yr.
David Kostin, the chief strategist for US equities at Goldman Sachs, thinks the S&P 500 may attain 6,500. That may be roughly a 9% achieve from present ranges — significantly lower than the 26% development achieved thus far this yr. Morgan Stanley expects related development.
Wells Fargo has raised the higher finish of its goal to six,700 from 6,400. It believes tariffs might be phased in steadily, with most unfavorable results delayed till 2026. BMO’s chief funding strategist Brian Belski eyes related development, with a perception that earnings development is modest.
FTSE 100 outlook
As within the US, UK analysts stay cautious with a touch of optimism. In keeping with Jefferies, 66% of market respondents anticipate the FTSE 100 to finish 2025 larger. That’s an enchancment from solely 50% final yr.
The Financial Forecast Company predicts the FTSE 100 will attain someplace round 9900 factors in December 2025, up 21% from at present. UBS believes the FTSE 250 may take off in 2025, saying it presents “a unique blend of resilience and growth potential.”
A promising FTSE 250 inventory
One inventory I believe has potential is ITV (LSE: ITV). The main British broadcaster and manufacturing firm was within the information this week after it grew to become a takeover goal. The low share worth has attracted bid curiosity from personal fairness agency CVC Capital Companions.
The corporate reportedly desires to separate ITV up, taking up the Studios arm for itself and promoting off broadcasting.
The share worth jumped 9% on the information to 71p, recovering losses made earlier in November.
ITV has had a tough few years because it struggles to compete with digital streaming companies like Netflix and Disney+. Whereas its Studios division continues to take pleasure in success with exhibits like Rivals and Love Island, the broadcasting arm is struggling to show a revenue. Declining revenues threaten income and put it vulnerable to falling additional into debt. Earnings are forecast to say no subsequent yr earlier than recovering in 2026.
However the falling worth additionally equates to an undervaluation. It’s now buying and selling at 72% under honest worth utilizing a reduced money move mannequin, with a price-to-earnings (P/E) ratio of 5.7. The specter of a buyout may give it the enhance it must recuperate, which may benefit shareholders if it rejects the provide.
The yield of seven.6% stays one of many inventory’s most tasty prospects to me. It’s well-covered by earnings and is forecast to extend by 0.5% per yr going ahead.
I’m undecided what’s going to occur however for now, I’m holding my shares in anticipation.
