What emotion drove the UK market last month?

Learn more about the index

Inspired by the CNN Business Fear & Greed Index

Last Update: 31st October 2024

Next Scheduled Update: 9th December 2024

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Current Indicator:

One month ago:

Six months ago:

One year ago:

33.5 (Fear)

57.2 (Greed)

57.1 (Greed)

25.9 (Fear)

7 Fear & Greed Indicators

Monitoring stock performance against its long-term trends helps gauge market sentiment. If the FTSE 100 remains above its 125-day moving average, it signals sustained strength and positive momentum. Conversely, when the index dips below this threshold, it may point to rising uncertainty or cautious behaviour among investors. This momentum metric is a key element in assessing shifts between cautious pessimism and growing confidence in the UK Fear & Greed Index.

Current Indicator: Extreme Fear

Analyzing market breadth is crucial to understanding the overall strength of the stock market. The 10-day rate of change in the FTSE All Share Index Advance/Decline Line measures how many stocks are advancing versus declining over time. A rising line indicates broader participation in market gains, signalling stronger investor confidence. Conversely, when declines outpace advances, it points to growing caution. This metric helps gauge whether market moves are driven by a broad base of stocks or just a select few, making it a key indicator for assessing the balance between market optimism and fear.

Current Indicator: Extreme Fear

The FTSE 100 McClellan Volume Summation Index measures market breadth by evaluating the balance between advancing and declining stocks in terms of volume. A higher index value indicates that a larger volume of shares is rising than falling, which signals stronger market participation and potential bullish sentiment. On the other hand, when the index declines, it reflects a weakening breadth, with more shares falling than rising. This tool helps to capture underlying shifts in market momentum, showing whether strength is broadly distributed or concentrated in fewer stocks.

Current Indicator: Neutral

The FTSE 100’s 5-day average put/call ratio reflects investor sentiment regarding future price movements. A put option represents a bet on falling prices, while a call option indicates a more optimistic outlook. When the ratio of puts to calls rises, it typically signals increasing caution or fear among investors, as they seek protection against potential declines. A ratio above 1 often suggests bearish market expectations, while a lower ratio points to greater confidence. This metric is a valuable tool in assessing shifts between risk aversion and market optimism.

Current Indicator: Neutral

This chart compares the percentage difference in 20-day returns between UK equities and government-issued bonds, providing insight into investor preferences for risk versus safety. When stocks outperform bonds, it reflects higher risk tolerance and market confidence. Conversely, when bonds outperform stocks, it indicates rising demand for safer assets, typically seen during periods of uncertainty or fear. This measure helps gauge shifts in investor sentiment between seeking growth through equities and opting for the stability of government bonds, signaling broader market concerns or optimism.

Current Indicator: Neutral

The FTSE 100's volatility, as measured by the GARCH model, plotted alongside its
50-day moving average, reflects expectations of future price fluctuations. Volatility tends to rise during periods of market stress or uncertainty, and decline in more stable, bullish environments. A spike in volatility often signals heightened concern, while a drop indicates greater confidence. The data for this chart is sourced from NYU Stern’s V-Lab, which provides a comprehensive view of market risk. Monitoring the relationship between current volatility levels and its moving average offers valuable insights into shifts between fear and stability in the market.

Current Indicator: Fear

This chart illustrates the option-adjusted spread (OAS) of the S&P U.K. Investment Grade Corporate Bond Index. The OAS represents the additional yield investors demand for holding corporate bonds over risk-free government bonds, adjusted for embedded options. A widening spread indicates that investors are seeking higher compensation for taking on credit risk, signaling concerns about the broader market or specific issuers. Conversely, a narrowing spread reflects increased confidence in corporate creditworthiness. Monitoring these shifts is essential for gauging risk sentiment in the bond market, particularly during periods of economic uncertainty.

Current Indicator: Fear

What is the UK Fear & Greed Index?
The UK Fear & Greed Index, inspired by the CNN Business Fear & Greed Index, is a tool designed to measure overall investor sentiment in the UK stock market. It reflects whether market participants are driven by optimism and risk-taking, or by caution and risk aversion. By capturing shifts in sentiment, the index helps investors understand the prevailing mood in the market, which can signal potential turning points, such as overvaluation during periods of greed or undervaluation during times of fear.

How is the UK Fear & Greed Index calculated?
The UK Fear & Greed Index is derived from a proprietary mathematical model that evaluates the current state of the market in comparison to historical financial data. The model further incorporates short-term momentum for each of the key factors, ensuring an up-to-date reflection of market sentiment. These factors include market momentum, stock price strength, stock price breadth, put and call options, corporate bond demand, market volatility, and safe-haven demand. Each indicator's performance is measured against its historical average, and the model assigns equal weighting to every factor. The index then produces a score between 0 and 100, with 0 representing maximum fear and 100 indicating maximum greed.

How often is the UK Fear & Greed Index updated?
The index is periodically updated at the beginning of each month.