In recent years, the FTSE 100 has roughly fallen into a seasonal pattern. It has started the year boldly, shedmost of its gains over a troubled summer, then rebounded to end the year brightly.
So far 2015 has been broadly the same. The FTSE 100 started the yearat 6457, climbed a healthy10% to hit a 52-week high of around 7100 in April, crashed below 6000 in late August and again in September. Now it is on the up again, trading at 6434 at time of writing.
Christmas Is Coming
The clocks have gone back, winter is on its way, and the Christmas promotions have already started in the shops. So is the index set for another end-of-year-surge?
It certainly felt like it on Friday, with the bullssensing blood following European Central Bank president Mario Draghis dovish talk, a surprise Chinese interest rate cut, and shrinking expectations of aUS rate hike. Markets show they have stillanimal spirits, whata shame they only really getfrisky when they scent another central banker splurge.
The FTSE 100could certainly storm the 7000 mark this year, providedtwo things happen. First, we needMarioDraghi to hand markets a yuletidegift in the shape of further monetary easing in December. And second, the US Federal Reserve must resist the temptation to play the Grinch andruin ourfestive fun by hiking interest rates before the year end.
Flying High
Personally, I expect the US and UK to move even more slowly than markets expect on interest rates, despite their fitful tough talk. Rates arent going anywhere for years, the global economy simply isnt fit enough to take itsmedicine. I also expect further slowing in China, which may serve to stay the Feds hand, maintaining the bad news is good news trend of recent years. Then all we need is an upturn in sentiment from todays unduly pessimistic outlook, and FTSE 7000 is on.
With the FTSE 100trading at around 16 times earnings and yielding around 3.85%, it certainly isnt overvalued. And even if the index doesnt fly, plenty of memberstocks look tempting buys at todays prices.
ShoppingSeason
My share of choice is currently Lloyds Banking Group, which yieldsjust 1% today but is forecast yield as much as 5% or 6% by 2016, which should also work wonders for its share price. Despite that, it is still trading at a tempting valuation of less than 10 times earnings. Barclays isanother bank getting on with itsrecovery, and also looks a temptingbuy today.
Pharmaceutical giants AstraZeneca and GlaxoSmithKline look great income buysin ourlow interest rate world, yielding 4.36% and 5.83% respectively.BP and Royal Dutch Shellmay have been sunkby todayslow oil price but I cant see $50 a barrelsurviving far into 2016, and ifthe price starts rising again, both stocks should pick up at an accelerated rate.
As 2015 moves into its investmentendgame there are plenty of reasons togo shopping shares. A seasonal surge in the FTSE 100 would be the icing on the cake.
There areplenty more great buying opportunities on the FTSE 100 if you know where to look.
This special report Motley Fool wealth creation report,top FTSE 100 stocks that could help you retire in comfortshows how dividend stockscouldmake you super-wealthyover the years ahead.
The Motley Fool’s 5 Shares To Retire Ondon’t just offer long-term growth, but juicyyields of more than 4% as well.
If you’d like to find out the identityof these five top companies, and how their shares could fuel yourretirement, simplyclick here nowfor instant access.
Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended shares in Barclays and GSK. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.