Goldman Sachs: FTSE 100 and DAX for 2021

The FTSE 100 will be well positioned for what comes next, as around 80% of the sales of listed companies in this index take place outside the country of origin.

Goldman Sachs expects the British FTSE 100 and German DAX indices to perform above average this year, CNBC says.

European markets started the year on the right foot, with their eyes set on the future economic recovery and grappling with the covid-19 vaccination plans that are expected to help a good outcome. But new strains and the severity of the pandemic’s proliferation are shaking the outlook for the Old Continent.

Goldman now expects a 0.1% contraction for the eurozone in the first quarter of 2021, and an even greater fall, of 1.5% in the United Kingdom. However, the FTSE 100 is “a very different beast,” one of the bank’s analysts tells CNBC.

The FTSE 100 will be well positioned for what comes next, as around 80% of the sales of listed companies in this index take place outside the country of origin – and Goldman expects a 6.5% expansion of the world gross domestic product , so Footsie companies can benefit.

On the other hand, the British index has great exposure to the financial and raw materials sectors, “which may return” in force in 2021.

In Germany, Goldman looks at DAX in the same way. Although it is not as cheap as the FTSE 100, it also presents “a modest discount” compared to the rest of Europe and is also well positioned to take advantage of the economic recovery.

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