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.
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Markit’s manufacturing Purchasing Managers’ index (PMI) UK and EU data did nothing to help the matter. In fact, experts suggests that it may have made things worse, starting the new year on a sour note. The PMI revealed that factory orders hit a three-month low, export orders had stagnated and that the sector was growing at a much sluggish pace than was expected.
Arguably, RBS was the first company to slide in the new year, with its shares under pressure largely due to a report in The Times alluding to the fact that the bank would be fined over 5bn for its hand in the sale of toxic mortgage-backed debt in the US?.
Unsurprisingly, the supermarket price war has had its toll on chains such as Sainsburys and Morrisons, which are down by 30 per cent. However, Tesco has managed to outdo them with a 44 per cent drop, no doubt after the accounts fiasco in September.
And due to the staggering drop in Brent crude, Tullow stock plummeted.
But Tullow isnt the only company to suffer because of the sector. The weakness in oil and gas shares as a whole has sorely let down blue-chip companies.
According to Shore Capital strategist Gerard Lane, the price of crude will be key to the FTSE 100 in 2015: Ironically, the longer the oil price stays down, the better the global economy and the better the non-commodity related sectors of the market can perform. But it probably means the FTSE 100 will lag global markets.
Taking the Footsie crown is Dizons Carphone with a 71 per cent rise over the year. This was all made possible by a merger with Carphone when rival Phones 4U went into administration. And lets not forget the TV sales ahead of the World Cup and Christmas.
The BG Group was also on a roll after news that the Egyptian government paid the company $350m as part of its aim to repay debts to the energy sector. And Qindell also had some good news. Its shares jumped highly needed after it lost 90 per cent of its value in 2014.
This spells out bad news for the UK, with the British index underperforming in the pan-European Stoxx 600, the Dow Industrial Average and the S&P 500, the two latter of which surged to record highs.
