The FTSE 100, short for the Financial Times Stock Exchange 100, is an index of the top 100 publicly listed companies on the London Stock Exchange ranked by market capitalization. This index was established in 1984 and is still overseen today by the FTSE Group, which is a subsidiary of the London Stock Exchange.
This index is less of a barometer of the UK economy as a whole. That’s because most equities listed in this index are global conglomerates. The FTSE 250 index is a more accurate benchmark of the UK economy as it contains a greater proportion of UK-centric companies.
It’s possible to buy the price of a share index to gain exposure to a balanced profile of influential firms. Alternatively, you may decide to sell the price of a share index if you believe the economy is due to experience a downturn. The process of buying and selling share index prices is what’s known as indices trading, with indices available covering all the listed companies in developed economies such as the US, UK, Germany, and beyond.
Let’s take a look at the five most valuable corporations within the FTSE 100 as of Q4 2022:
Shell (LON: SHEL)
Shell is regarded as one of the “supermajors” in the oil and gas industry. With its headquarters based in London, this giant is traded on the London Stock Exchange, as well as the Euronext Amsterdam and the New York Stock Exchange. Shell plays an influential role in the production, exploration, refinement, and transportation of oil and gas worldwide.
AstraZeneca (LON: AZN)
Headquartered in Cambridge, England, one of the bioscience hotspots in the world, AstraZeneca is one of the most influential pharmaceutical and biotechnology firms in Europe. Established in 1999 following the merger of Swedish firm Astra AB and UK-based Zeneca Group, this organization focuses on developing medical products to counteract major diseases including neurological, cardiovascular, and respiratory conditions.
Linde (LON: LIN)
Linde plc is the world’s biggest industrial gas firm, originally established in Germany but latterly headquartered in the UK. Its number-one service is the transportation and creation of atmospheric gases for industrial markets. These gases include oxygen, nitrogen, carbon dioxide, and helium. As a leading member of the Hydrogen Council, Linde is playing an influential role in pushing forward hydrogen as a credible alternative energy source to electricity for next-generation road vehicles.
Unilever (LON: UL)
For almost a century, Unilever has been pioneering consumer goods across the globe. It’s one of the world’s largest producers of soap, numerous health and beauty products, and cleaning agents, as well as food and condiments. It invests heavily in the research and development of home care, foods, and personal care, with facilities situated worldwide in the UK, the Netherlands, the US, India, and China.
HSBC (LON: HSBC)
HSBC is currently Europe’s biggest bank. It has trillions of dollars in total assets managed. Its roots date back to the mid-19th century when it was formed in British Hong Kong. Today, it has a presence in 64 nations and currently serves over 40 million customers worldwide.
One area that FTSE 100-listed companies are vulnerable is the value of the pound sterling (GBP) against the US dollar (USD). When the pound is weak against the dollar, this can weigh heavily on the growth prospects of FTSE 100-listed firms. Simply because these firms typically import raw materials, goods, and machinery, which are often priced in USD denomination. Therefore, it’s worth keeping an eye on the FTSE 250 in the near future as a benchmark for the health of the UK economy, especially considering the expected recession.