Oil price weakness, bond market gains and chaos in the currency markets are grabbing the headlines but the share prices of UK-listed companies are also becoming more unpredictable and investors may have to face more volatility in the year ahead, says investment platform provider AJ Bell.
“The FTSE 100 has risen or fallen by 2% or more in a day every 13 trading sessions on average since January 1995 but this figure has jumped to once every 6.6 days following the US Federal Reserve's decision to stop adding to its ultra-loose monetary policy last October,” says Russ Mould, AJ Bell Investment Director. “Such increased volatility is not a bad thing in itself, as it can provide a chance to sell at expensive valuations or buy at cheaper ones. However, investors should run properly balanced portfolios so they can better manage the risk posed by any wild swings in asset prices and then potentially look to take advantage of them.”
Notes for Editors
- A spreadsheet showing the size of daily moves in the FTSE 100 since 1995 is available on request.
- The FTSE 100 has moved by more than 2% from open-to-close eight times since 29 October 2014, when the US Federal Reserve stopped adding to its Quantitative Easing scheme.
- On 15 January the Swiss National Bank abandoned its attempt to hold down the value of the Swiss franc by pegging the currency to the euro. At least two forex brokerage firms and once hedge fund ceased to trade owing to huge losses inflicted by the following surge in the Swiss franc.
- The European Central Bank meets in Frankfurt tomorrow, 22 January, to discuss its latest monetary policy move.
- The US Federal Reserve next meets in Washington DC on 28-29 January and the Bank of England's Monetary Policy Committee meeting on 4-5 February in London.