The FTSE 100 could be on track for double-digit gains this year. At least, that’s according to the most optimistic prediction from one UBS analyst, representing a 19% rise from current levels.
The analyst’s base case sees the index climbing from 10,340 to 11,000 by December, with a further growth scenario pushing it to 12,300 by June 2027.
What’s driving the optimism?
Oil price surges have boosted UBS’s earnings growth forecast for the UK to 11% this year compared with just 5% at the start of 2026. The estimate for 2027 earnings growth sits around 10%, with improving economic output expected to offset predicted oil price rollovers.
Current FTSE index valuations are ‘reasonable’ at 12.4 times forward earnings, versus the median since 1990 of 12.8 times. About 75%-80% of Footsie revenues are generated outside the UK, meaning any pound weakness would boost local currency returns.
But one forecast doesn’t guarantee growth. How else could things go?
3 ways it could play out
UBS sees three distinct scenarios shaping the FTSE 100’s path:
| Scenario | FTSE 100 target | Key drivers |
|---|---|---|
| Base case | 11,000 (Dec 2026) | Short-lived energy disruptions, 11% earnings growth |
| Upside | 12,300 (Jun 2027) | Stronger global growth, higher commodities, weaker sterling |
| Downside | 7,700 (-25%) | Trade wars, lower commodity prices, higher bond yields |
The downside scenario could see the index fall 26% if trade tensions re-emerge. Since commodities contribute around 25% of its overall profits, any decline there could have a significant impact.
With that in mind, what should UK investors be looking at now?
Eyeing an opportunity
Shell (LSE: SHEL) stands out as a compelling opportunity within the current macroeconomic climate. It’s the third-largest FTSE 100 company by market-cap (£174.5bn) and aligns perfectly with UBS’s commodity-driven upside thesis.
Plus, it already pays £6.3bn in dividends annually — the second-largest in the FTSE 100 after HSBC’s £10.7bn. The low payout ratio (45%) and solid cash coverage makes it both a growth play and a reliable dividend payer (albeit with only a moderate 3.4% yield).
JPMorgan, one of 12 analysts giving Shell a Buy rating, set a price target of 3,400p. Meanwhile, UBS analyst Ian Douglas-Pennant noted the oil major’s “diversified energy business (oil, gas, LNG, renewables, retail)” offers strategic optionality despite transition challenges.
However, as always, there are risks to consider. Most pressingly, it faces increasing pressure to pivot from fossil fuels to renewables, which is costly and adds execution risk. At the same time, oil dependency means any drop in oil prices threatens the share price.
The bottom line
The FTSE 100’s dual nature — driven by domestic commodities and multinational earnings — means bond yields and oil prices will dictate direction more than company-specific news.
So the 19% gain is realistic if global growth accelerates significantly, but risks are real if trade tensions flare. In that environment, Shell’s attractive and is worth looking at more carefully. The 3.24% dividend yield provides an income cushion even amid commodity-driven volatility.
But to avoid too much exposure in the event of a downside move, it makes sense to consider bolstering a portfolio with a few defensive FTSE shares.
Should you invest £5,000 in Shell Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Shell Plc made the list?
Mark Hartley does not hold any positions in the companies mentioned.
