FTSE 100 investors should pay attention to these 4 things in September 2024

It was a good year FTSE 100 index. London's flagship benchmark has delivered a 7% gain year to date. Many British investors, myself included, will be hoping for more of the same as 2025 approaches.

The share prices of FTSE 100 companies are determined by a number of factors. However, I think these four are the most important for the UK capital market in the coming months.

Let's examine each in turn.

Interest rates

Last month, the Bank of England cut interest rates to 5%. Many City analysts are hoping for more to come. The Monetary Policy Committee meets next on 19 September.

In general, the share prices of many FTSE 100 firms rise when interest rates fall as borrowing costs fall. However, this is not true for all Footsie stocks.

For example, bank shares are similar Barclays, HSBCagain Lloydshas a complex relationship with interest rate changes as interest rates decrease when rates are low.

Monetary policy

Apart from monetary policy developments, investors should also monitor monetary policy changes. The UK now has a new government. Chancellor Rachel Reeves' first budget won't be available until October 30, but we can expect hints about what might be in store.

Prime Minister Sir Keir Starmer has warned the public that the budget “It will be painful“. A £22bn black hole in the country's finances could lead to negative tax changes for UK investors.

Capital gains tax (CGT) is in different jurisdictions. Any dramatic increase in CGT could hurt FTSE 100 shares across the board.

This also means that making the most of the £20k stocks and shares ISA limit has never been so attractive.

Please note that tax treatment depends on the individual circumstances of each client and may change in the future. The content of this article is provided for informational purposes only. It is not intended to be, and does not constitute, any form of tax advice. Students are responsible for conducting their own due diligence and obtaining professional advice before making any investment decisions.

Geopolitics

The ongoing wars in Ukraine and Gaza continue to affect investor confidence. Many FTSE 100 stocks have been exposed to these conflicts to some extent. Defense stocks like BAE Systems especially those affected. It is worth keeping an eye on any developments on the battlefield.

In addition, the build-up to the November US presidential election and any changes in UK-EU relations in the post-Brexit world will have an impact on the FTSE 100 allocation.

The pound sterling

All of the above factors influence the currency markets. Sterling has rallied in recent months and its future path will have an impact on the FTSE 100.

The Footsie often has an inverse relationship with the pound as many of the shares are large multinational companies that earn income in foreign currencies and report profits at a higher rate.

FTSE 100 stocks to consider

Uncertain times can increase the appeal of a defensive stock. One FTSE 100 company with strong defensive credentials is a pharma giant AstraZeneca (LSE:AZN) as demand for healthcare products remains strong throughout the economic cycle.

Strong sales of the company's cancer and rare disease drugs have boosted AstraZeneca's share price and the future potential of the company's pipeline looks impressive.

The business aims to generate $80bn in annual revenue by 2030. In addition, the board identified several therapies that could generate more than $5bn in peak annual revenue.

Of course, clinical improvement is not guaranteed. A possible share price correction is on the cards if the drug portfolio does not meet expectations.

However, overall, I consider AstraZeneca shares to be an excellent investment to consider.