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On April 30, the FTSE 100 reached a new record of 8,200 points. He surpassed the previous high of 8,189 points, set just a day earlier.
Has investor confidence finally returned to the UK stock market? We are still in the early days. But the latest results we've seen from major companies have been mostly positive.
I want to look at two of the UK's favorite Footsie stocks.
Bank at Barclays?
Banking sector profits in the first quarter declined, as expected, but not as badly. And the prospects look increasingly bright.
I will pick up Barclays (LSE: BARC) for several reasons. Especially since the share price is up 33% so far in 2024.
There is one main reason why I think Barclays might be a better barometer of UK market sentiment than, say, Lloyds Banking Group. And that's because it still retains its international investment banking arm, which operates in the United States.
International focus
A quick look at the S&P 500 and the Nasdaq shows how bullish the US market is becoming. Given that the majority of our FTSE 100 stocks are truly international in nature, I think we need to look more at the global picture.
Even after the share price rally so far in 2024, Barclays' valuation still doesn't look entirely overblown. At least not fundamentally. Forecasts put the stock at a price-to-earnings (P/E) ratio of 6.5, with a dividend yield of 4%.
Have investors forgotten the risks that banks still face this year, pressured by interest rates? Maybe, but optimism seems to be here.
Rolls-Royce keeps rolling
The other popular stock I want to analyze is Rolls-Royce Holdings (LSE:RR.)
Rolls' share price has quintupled in the last two years. And, just when it looked like it was going to explode in early April and was about to crash, it bounced back.
Some of us were expecting a stock price correction after such a rise. And I really expected to see shareholders taking some profits off the table now.
they are still buying
But it seems that the demand is still there. And that lends further support to a key thought. That strong investor confidence could see the FTSE 100 rise considerably even in 2024.
What will happen next to the Rolls-Royce share price? On the one hand, the great progress made in the last two years could suggest declines in May and subsequent years.
But I think we could also argue that a P/E of 28 for 2024 is still a good value, with the growth expectations that Rolls now enjoys.
FTSE 100 in May?
So where could the FTSE 100 go in May, June and…?
Month-to-month movements don't mean much to a long-term investor. And we should make our buying decisions based on individual stock valuations.
But many of them still seem low to me. Add to that rising investor sentiment, and I see a good chance for more stock market gains in May and beyond.
