What is Footsie
Footsie is slang for the Financial Times-Stock Exchange 100 Share Index (FTSE 100).
The Footsie is an index that tracks the 100 largest public companies in market capitalization which are traded on the London Stock Exchange (LSE). The FTSE 100 represents more than 80% of the market capitalization of the LSE. FTSE is an acronym for the Financial Times and the LSE, its original parent companies. The FTSE is now owned and managed by the London Stock Exchange Group. It has similar importance in London to the Dow Jones Industrial Average and the S&P 500 and is a major indicator of broader market performance.
The level of the FTSE 100 is calculated using the total market capitalization of the constituent companies and the value of the index.Total market capitalization changes with the individual stock prices of indexed companies throughout the trading day, so the value of the index also changes. When the FTSE 100 is quoted up or down, it is measured against the previous day’s market close. It is calculated continuously each trading day from 8:00 a.m. at market opening until the LSE closes at 4:30 p.m. A drop in the FTSE 100 means the value of the larger UK listing declining businesses. The FTSE hitting a new high means the total value of all indexed companies is rising.
Composition of the FTSE
The FTSE 100 was launched in 1984. Since then, its composition has changed to reflect Mergers and Acquisitions as well as entering and exiting companies, highlighting its function as a barometer of market activity. A company does not need to be British to be on the FTSE but must be listed on the LSE. Since many listed companies are based overseas or do most of their business overseas, the value of the pound is also a factor. A weaker pound means a dollar-based business would be worth more in pounds, and a rising pound means companies doing business in Europe would earn less in the UK.
The FTSE reviews the constituents of the FTSE 100 every quarter to ensure it includes the highest market capitalization companies. FTSE also researches and publishes many other indices that track a wide range of securities and financial instruments Other FTSE UK indices include the FTSE 250, which comprises the 250 largest companies after the FTSE 100, and the FTSE SmallCap, which comprises the next smallest group of companies. The FTSE 100 and FTSE 250 make up the FTSE 350 and, together with the FTSE SmallCap, the FTSE All-Share.