2014 proved a volatile year for the stock market. Over the course of the year, companies rose as high as 6,904.86 and as low as 6,072.68 in intraday trade. The FTSE 100 even came within 100 points of breaking the all time record set in 1999.
But although the Footsie started the year in positive fashion, the total value of the FTSE 100 has dropped by 40bn amid global growth worries and the oil price.
“We are entering 2015 with much more perceived risk than we entered the past year,” said Stiefel Europe CEO Simon Bragg. There remain considerable global and domestic geopolitical and economic worries, as the collapse in energy prices and the recent slump in the rouble have shown.
These concerns will continue to impact economies, businesses and markets and will not go away quickly or easily. In addition, we are facing a general election in the UK, with considerable uncertainty as to its outcome. This will create yet more nervousness and volatility in markets.
There will be continuing quantitative easing and low interest rates and also a lower oil price, which will hopefully help to calm the volatility somewhat.
Unfortunately, it seems that we are likely to see large swings in the FTSE 100 and some quite dramatic one-day movements as markets react to world events.
And Angus Campbell, senior analyst at FxPro, suggests that the recent turmoil in financial markets is a firm indication that things in 2015 are unlikely to be easy or straightforward for investors.
As a case in point, the FTSE 100s inability to push on higher and take out its all-time high at 6,930 (6,950 intra-day) ought to be seen as a warning,” he said. The FTSE 100 is a very good measure of not just domestic, but global investor sentiment and it has struggled to break to new all-time highs on two occasions since it was set in 1999.
As a global index this is something all investors should be wary of given its heavy weighting in energy and mining stocks. This has restricted the FTSE 100s upside and in order to see the all-time highs taken out, sentiment towards these sectors needs to recover.
This will only happen if the global economic picture improves, which at this moment in time might seem like a long way off, but as the stimulus from falling oil prices feeds through, a good buying opportunity could be presented to investors in the first half of 2015.