Over the previous few weeks, the FTSE 100’s pushed increased, making contemporary all-time highs. It’s buying and selling round 8,840 factors, with the psychologically key 9,000 level stage nearly irresistibly shut.

But, given the scale and timing of the latest transfer, the index is probably trying a bit overbought. Due to this fact, I assumed I’d flip to everybody’s favorite AI-bot to see what goal data it will give me for the yr forward.

Getting the inexperienced mild

ChatGPT thinks there’s an inexpensive expectation that the index will surpass 9,000 factors this yr. It supplied a few causes to again this up. The primary was analyst expectations. It cited completely different sources from the web and respected funding platforms that forecast progress for the index from the present ranges.

The second purpose was primarily based round UK financial forecasts. For instance, Morningstar analysts anticipate reasonable financial progress for the UK this yr, with inflation solely barely above goal.

The group recommend that revised fiscal insurance policies may present extra flexibility, probably supporting increased valuations within the inventory market. In consequence, this might assist to gas a rally above 9,000 factors.

Warning required

The issue with ChatGPT is that it’s purely goal. It doesn’t think about sentiment or the view from the bottom, which is why people nonetheless have a major position to play in terms of making funding selections.

For instance, the most recent inflation determine for January hit 3%, the very best stage since final March. I do know many individuals are tightening their belts once more in terms of discretionary spending.

This won’t hamper FTSE 100 shares in the present day, however I believe it may affect the index general later this yr. For instance, think about Whitbread (LSE:WTB). The buyer discretionary inventory’s down 23% over the previous yr.

The hospitality firm owns Premier Inn, with many of the motels within the UK, but in addition some publicity in Germany. It makes cash from the lodge bookings, foods and drinks gross sales and related add-ons.

I assumed it was attention-grabbing that in a buying and selling replace for the latest Christmas/New Yr interval, UK lodging gross sales had been solely up 2% versus the earlier yr. Whole group gross sales really fell 2% to £763m.

Trying ahead, I really feel Whitbread may battle if the UK economic system does sluggish down. Clients may determine to chop again on holidays or select extra funds options. After all, in my opinion, the danger is that fears across the UK are misplaced. If we attain summer time and sentiment’s booming, the corporate has the potential to outperform massively.

Bringing all of it collectively

I consider the FTSE 100 will break by way of 9,000 factors shortly. However I believe the index may have some type of wholesome correction as we transfer into the summer time. This may very well be pushed by some buyers banking income, in addition to the potential for a worldwide commerce conflict with US tariffs taking impact. Any slowdown within the UK economic system may weigh available on the market too. I’d anticipate client discretionary shares to underperform on this interval, so I’ll be staying away from Whitbread proper now.

However ought to we get such a dip, I’d use it as the chance to load up on low cost bargains.