The FTSE 100 could be heading for a landmark year, with one major Wall Street bank forecasting a significant double-digit gain before the year is out.
UBS analysts have set a base case target of 11,000 for the index by December, representing a 19% rise from current levels around 10,340.
The bank’s most bullish scenario goes even further, projecting the index could reach 12,300 by June 2027 if global economic conditions continue to improve.
A key driver behind the optimism is the surge in oil prices, which has pushed UBS’s earnings growth forecast for UK-listed companies to 11% this year, up sharply from just 5% at the start of 2026.
The forecast for 2027 earnings growth sits at around 10%, with stronger economic output expected to offset any predicted rollover in oil prices later in the cycle.
Current FTSE 100 valuations appear reasonable by historical standards, trading at 12.4 times forward earnings compared to the long-run median of 12.8 times since 1990.
The index also benefits from significant international exposure, with around 75% to 80% of Footsie revenues generated outside the UK, meaning any sterling weakness would provide a further boost to returns.
However, UBS also outlines a downside scenario in which the index falls 26% if trade tensions re-emerge, a real risk given that commodities account for roughly 25% of overall FTSE profits.
Within this macro backdrop, Shell (LSE: SHEL) stands out as a particularly compelling proposition, sitting as the third-largest FTSE 100 company by market capitalisation at £174.5bn.
Shell already distributes £6.3bn in dividends annually, making it the second-largest dividend payer in the FTSE 100 behind HSBC’s £10.7bn, with a relatively modest payout ratio of 45%.
UBS analyst Ian Douglas-Pennant highlighted Shell’s “diversified energy business (oil, gas, LNG, renewables, retail)” as offering strategic optionality, even as the company navigates ongoing energy transition challenges.
JPMorgan is among 12 analysts currently carrying a Buy rating on the stock, with the US bank setting a price target of 3,400p for the oil major.
Shell’s 3.4% dividend yield provides a degree of income protection for investors even during periods of commodity-driven market volatility.
The risks are nevertheless real, with Shell facing mounting pressure to accelerate its shift away from fossil fuels toward renewables, a transition that carries both significant cost and execution risk.
Oil price dependency remains a structural vulnerability, meaning any sharp decline in crude prices would likely weigh heavily on the share price regardless of the broader index direction.
The FTSE 100’s trajectory this year will ultimately be shaped more by bond yields and oil prices than by individual company performance, making macro awareness essential for investors considering exposure now.