The FTSE 100 has offered the best risk-reward profile of all the major European exchanges this year, and should continue to outperform in the months ahead, according to Deutsche Bank. Positive retail data and GDP growth at the end of last week helped both the FTSE and the pound. Retail sales climbed 0.5 per cent while GDP growth for the June quarter was 0.6 per cent.
The FTSE 100 has outperformed Europe’s Stoxx 50 benchmark by 10 per cent since April, while having the lowest rate of volatility by some distance, the bank’s analysts said. They expect this to continue, given the FTSE 100’s heavier weighting to value sectors, greater perceived political stability in the UK and a valuation that is “not only cheap relative to the rest of Europe but also relative to its own history”, said Maximilian Uleer, the bank's head of European equity and cross asset research.
Deutsche has a price target of 8,700 for the FTSE 100 by year-end, which is only 4 per cent higher than the index’s current level.