Around 80% of the UK100’s, also called the FTSE 100, revenues come from overseas markets. We’d go as far as to say it should be how broader economic trends influence the UK100 index, but they’re the same. They move with each other, with the index being a benchmark for the UK’s economic health and, indeed, the global economic health.
With the most recent average trading volume at 725,275,216 and technical indicators and market summary suggesting the FTSE 100 is in a strong buy sentiment, we want to explore how the UK100 index reflects broader economic trends. Read on to find out more.
Macroeconomic Trends
The FTSE 100 tracks the largest companies by market cap listed on the London Stock Exchange.
We’d say the index responds more to global economic and macroeconomic trends than to UK GDP growth. That doesn’t mean it doesn’t respond to the UK GDP growth; it definitely does, but it’s more loosely related to the domestic economy, according to JPMorgan. It’s the smaller-cap indices tracked on the FTSE 250 that focus more on UK sales and UK demand.
If you track the FTSE 100, you’ll notice that a weaker pound boosts the index by inflating overseas profits in sterling. Or, looking at it the other way around, a stronger GBP can drop FTSE returns.
Putting it into context, if you’re from the UK, you’ll know the UK economy is struggling with the change of the new government. In 2024, the GDP only grew by just below 0.9% compared to the FTSE 100, which delivered close to 10–15% in returns.
GDP Growth and Inflation
The UK output has been relatively flat since the COVID-19 pandemic. The market recovery has only been modest, equal to around £650 billion by late 2024.
And with a recovery of only around 0.9% in 2024, it’s predominantly stagnant compared to other nations, as the US, for example, grew by 2.8% in 2024. Analysts might have predicted it to reach nearer to 1.1% by the end of 2025, and although the true figure might be slightly below that, it should beat the 0.9% growth of 2024.
But if you’re investing in stocks on the FTSE 100, as we said, maybe you won’t feel too concerned if the GDP doesn’t rise as much as predicted. Global growth, specifically from the UK and China, always has a positive impact on the UK100 market indexes. The lack of a link between the UK economy and the stock market is definitely a positive thing for equity investors.
UK inflation, however, has slightly more of an impact on the UK100 index. Known as the Consumer Price Index (CPI), it has remained stagnant at 3.8% for the last three months (following data from September 2025). Individual sector inflation rates do vary. For example, one of the hardest hit sectors was food and non-alcoholic beverages, with its annual inflation rate decreasing to 4.5% in September 2025, down from 5.1% in August.
High inflation and interest rates across sectors, sitting at around 4–4.75%, have impacted domestic consumption and cost-sensitive sectors more heavily.
That being said, a lot of FTSE 100 companies, especially energy and telecoms, can benefit from global commodity prices. Thanks to its massive global revenue base, inflation might slightly impact the UK100 index more than GDP, but it still doesn’t do too much to affect the market.
Business and Consumer Confidence
If you track the FTSE 100 index on platforms such as Exness, you’ll see the equities are rallying and the general market is sitting in a strong buy indicator. Despite that, UK sentiment has actually weakened.
It’s no secret that consumer confidence is massively weakened as the nation faces a cost-of-living crisis that feels almost impossible to manage. And, because of that, surveys are showing businesses are cautious, and low consumer confidence forecasts weaker domestic consumption.
Again, we have to go back to the fact that the majority of the revenue of the UK100 comes from international profits. As seen by the numbers and record highs for the UK100 in 2025 so far, the fragile domestic economy, whether it’s inflation, GDP, or consumer confidence, isn’t having much of an impact on the FTSE 100. UK-oriented firms are the ones suffering.
Global Exposure and Currency
A lot of what we’ve discussed so far looks positive for the UK100, but when you look at global exposure and currency, trading signals on platforms such as Exness would show that’s where the index suffers and reacts more sensitively.
The US has the biggest impact on the performance of the FTSE 100. With 30% of revenue coming from the US, it’s natural that economic trends from over the pond would lead to a sometimes negative revenue rate on FTSE-listed companies.
For example, the recent to-and-fro about US tariffs, specifically on technology or finance imports, could cut FTSE earnings. And whenever Trump mentions the tariffs, the market drops.
Looking at the US dollar/GBP rate, a stronger dollar to a weaker pound does boost UK100 returns as the value of sterling rises from foreign profits.
Comparison with Other Indices
Compared to global indices, the UK100 doesn’t exactly look great. Comparing it to the S&P 500, the US large-cap equivalent of the UK100, it has far outpaced UK markets as their technology sector booms and consumer confidence grows.
Recent publications from JPMorgan show that the UK 100 trades at a substantial valuation discount compared to the UK. That prompted an influx of UK mergers and acquisitions and buybacks. In Q1 2025, there were 31 bids made under £100 million.
Despite that, it’s argued that the lower technology sector weight and higher dividend yield make a more defensive equity allocation for investors than the more growth-heavy S&P 500 index.
The UK100 doesn’t necessarily follow broader UK economic trends; it’s more heavily influenced by global trends and insights. If it weren’t for the fact that most of the revenue is generated overseas, then the market would suffer differently. Now, for investors of the UK100, the market sentiment is positive with relaxed trade tariffs from the US and global interest in UK100-listed companies rising.
Okwum Uchechukwu, a Journalist, serves as Editor with the Tide Newspapers, and writes in from PortHarcourt, Rivers State.
NB: Opinions expressed in this article are strictly attributable to the author, Okwum Uchechukwu, and do not represent the opinion of CrossRiverWatch.