Proactive Investors - Bank of America (NYSE:BAC) predicts the FTSE 100 could tumble by around 1,000 points by the end of 2024.
The investment bank made the claim in a European equity strategy update in which it remains underweight on the UK.
BofA pointed out the UK has been the weakest major country performer this year, underperforming the broader European market by 8%.
This has been driven by double-digit European energy sector underperformance in response to a fade in the oil price (with the sector a key overweight in the UK index) plus the strength of the pound on the back of UK inflation concerns (which weighs on the export-orientated UK equity market).
Despite the recent fall in oil prices, BofA expects 10% further energy underperformance by the middle of next year, given scope for further oil price weakness on softening global growth.
This points to 3% further downside for UK’s price relative over the coming months, even adjusting for the downside BofA sees for European cyclicals versus defensives (a boost for the UK, given its mildly defensive sector skew).
In combination with its expectations for 10% downside for Europe by the end of next year, this implies 13% downside for the FTSE 100 to 6,550 by end-2024.
BofA sees the DAX at 15,400 by end-2024 and is ‘equal weight’ on Germany as a whole, but is ‘underweight’ France, Spain and Italy.
It is ‘overweight’ on Switzerland.