Analyst predicts FTSE 100 break above 12,000
Despite market turbulence, City experts have issued a new range of targets for the UK blue-chip index. Graeme Evans reveals their three preferred ways to play the theme.
11th June 2026 11:59
by Graeme Evans from interactive investor
A “supportive backdrop” for UK equities has led a City bank to forecast that the FTSE 100 index will add another 9% by this time next year - and 19% under its most optimistic scenario.
Despite the potential upside, UBS continues to rate the UK with a Neutral stance as it favours markets that are either more cyclical or have higher structural growth exposure.
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UBS believes that opportunities in the UK market are better accessed via single-stock selections, having noted the “very narrow” market leadership over the past 12 months as the FTSE 100 index is up 17% in contrast to the median stock at 8.8%.
In a research note to UBS Global Wealth Management clients, the bank said that UK valuations were reasonable at 12.4 times forward earnings versus the median since 1990 of 12.8 times.
It added that global monetary and fiscal policy remains largely supportive, while the recent surge in oil prices means the bank’s earnings growth expectation for the UK this year has risen to 11% compared with its 5% forecast at the start of 2026.
The estimate for earnings growth in 2027 is around 10%, with improving economic output set to offset the expected rollover in oil prices.
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UBS said: “This should continue to support UK equities, but we see a brighter outlook for other regions.
“In our base case where energy disruptions are relatively short-lived, we see greater potential for gains in more cyclical markets that have experienced the most weakness in recent months, with the UK's high exposure to the energy sector also likely to weigh on it.
“The UK market also has a relatively low weight in the industrial sector and therefore may not benefit as much from the manufacturing pick-up we’re anticipating, which is in part supported by some investment intensive secular themes, such as AI, electrification and defence spending.”
The bank’s central scenario is that the FTSE 100 index improves from Tuesday night’s closing price of 10,340 to reach 11,000 by the year-end and 11,300 next June.
Its UK preferences include cyclical earnings improvers such as the industrials and consumer discretionary sectors, particularly high-end consumer stocks.
The bank also looks to structural growth opportunities in the industrial and healthcare sectors, including European leaders in electrification and automation.
The third preference relates to the potential beneficiaries of fewer rate increases versus market expectations, which should support real estate stocks.
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The upside scenario for the FTSE 100 involves a June target of 12,300, which is driven by stronger-than-expected global growth, higher commodity prices and weaker sterling.
About 75-80% of FTSE 100 revenues are generated outside the UK, meaning the pound’s fall would support higher local currency returns.
The diversification of US investors into UK assets could also drive the upside scenario as this would close the UK’s valuation gap with US equities.
The bank’s downside estimate points to a 25% fall over the next year to 7,700, with the re-emergence of trade wars, lower commodity prices and sharply higher bond yields among the reasons.
Stronger sterling would also be a drag on the FTSE 100 as foreign earnings will be less valuable when translated back into the UK currency.
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