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London Stock Exchange Index: Trading on the FTSE 100

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The London Stock Exchange, or LSE, is the principal financial market of the United Kingdom where all the stock market transactions for British companies take place every day. As with the other national stock markets, the London Stock Exchange has a principal stock market index, the ‘Footsie’ or FTSE. Here you can learn more information on this subject.
 

The FTSE in detail:

The abbreviation FTSE actually stands for ‘Financial Times Stock Exchange’. This major stock market index incorporates 100 British companies quoted on the London Stock Exchange, selected mainly according to their stock market capitalisation.

It should also be noted that the FTSE 100 Index is actually the popular Index of the London Stock Exchange.

To efficiently trade this stock market index using CFDs, it is important to first understand that the FTSE 100 is highly representative of the British economy and this country’s financial and economic health. It should be noted that the companies represented in this index embody roughly 80% of the total stock market capital on the London Stock Exchange.  

However, all the companies quoted do not have the same weight relative to the calculation of this index. Therefore the results of these 5 most important companies should be followed closely; BHP Billiton, Royal Dutch Shell, HSBC, Vodafone and British Petroleum.

 

Historical rates for the London Stock Market Index:

The historical analysis of the FTSE 100 reveals valuable indications relative to the way it reacts to different economic situations and crises

Initially quoted at 1,000 points, it was in 1999 that this index reached its highest historical level of 6,950.60 points. It moved in a saw tooth manner between 2006 and 2007, ending at 6,730.70 points.  

As with the majority of international indices, the Footsie suffered during the subprime crisis and fell to around 5,495 points. 

The economic crisis then dragged this index towards its lowest level of around 3,500 points during the year 2009. It then recovered somewhat by small hops up to the 5,500 point level in 2010 which was followed by a corrective downwards move. 

Since 2010, the FTSE 100 has trended towards a rise. In fact a strong rise was experienced in July 2010 that enabled the 6,000 threshold to be breached, then, in 2011, this index stabilised at around 5,800 points.

 

The major companies incorporated in the FTSE 100:

The Footsie is therefore a British Index that takes into account the weighted floating capital of the 100 British companies that have the highest capital liquidity as quoted on the London Stock Exchange.

The FTSE 100 is quoted continuously which means that its rate is updated every 15 seconds according to the market situation. It is important to note that the composition of this stock market index is revised every quarter. When a company quoted on this index is removed it is generally replaced by one that is quoted on the FTSE 250 which is a larger version of the index we are studying here.

The number of assets quoted in this index can sometimes be higher than 100, notably when companies issue several different assets. To better understand how the London Stock Exchange Index, the FTSE 100, is composed here are the top 35 major companies included listed according to their capital:

  • Royal Dutch Shell
  • BP
  • Vodafone Group
  • HSBC
  • GlaxoSmithKline
  • AstraZeneca
  • British American Tobacco
  • BG Group
  • Tesco
  • BHP Hilton
  • Diaego
  • Unileer
  • Imperial Tobacco Group
  • Reckitt Benckiser
  • SABMiller
  • Standard Chartered
  • National Grid
  • Rio Tinto Group
  • Lloyds TSB
  • BAE Systems
  • Centrica
  • Scottish and Southern Energy
  • Barclays
  • Roya Bank of Scotland
  • British Sky Broadcasting
  • Prudential
  • Aviva
  • British Energy
  • BT Group
  • Cadbury
  • Morrisons
  • Compass Group
  • Rolls-Royce
  • Sainsbury’s
  • Reed Esleivier
  • Shire

The different activity sectors represented here are agro-food, banking, energy and oil, insurance, distribution, brewing, mining, armaments, multimedia, pharmaceuticals, retail products, catering, tobacco, and telecommunications.

It should also be noted that the performance of the London Index is close to those of the Dow Jones, the CAC 40 and the DAX 30.

Online trading on the London Stock Exchange Index:

As with many of the major stock market indices, the FTSE can be traded directly online using CFDs. By speculating using these contracts you can trade on the rise or fall in the rate of this asset.