From the point of view of those investors with exposure to the UK equity market, the bad news is that aggregate consensus forecasts for the members of the FTSE 100 index fell by 4% in the first six months of this year, to £247 billion from £258 billion.
The good news is that £247 billion figure is still a record high, and it therefore helps to justify why the index is trading close to an all-time peak.
The imminent first-half results season will be a good test for both the quality of the forecasts and the FTSE 100’s momentum, especially since that level of earnings is enough to leave the UK stock market on barely 12 to 13 times forward earnings for this year. By comparison, Europe is on 13 times, Japan 16 times and the USA a meaty 23 times, according to consensus analysts’ forecasts.
The UK therefore (still) looks cheap. Investors now have to decide whether the forecasts are any good, what momentum is like, and what are…
