FTSE 100 off to its most volatile start to a year in over two decades

In just 36 trading days this year, the FTSE 100 has risen or fallen by more than 1% from open to close on 24 occasions, the most in any year going back to at least 1995 – and that is before any further uncertainty created by the run up to the EU referendum on 23 June.

The only years which come close to this figure are 2000, 2003, 2008 and 2009, which saw 23, 20, 16 and 16 such movements respectively. 

The bad news is 2000 and 2008 live in investors’ memories for the wrong reasons. The FTSE 100 fell 10% in 2000 as the technology-led bull run in stocks came to an end and a three-year bear market began, while the index plunged 31% in 2008 as the financial crisis reached its zenith.

Source: Thomson Reuters Datastream, AJ Bell Research. Covers period from 1 January to 22 February in each year

NOTE: Past performance is not a guide to future performance and some investments need to be held for the long term.

“History is not guaranteed to repeat itself but this sort of volatility unfortunately tends to be a bad sign rather than a good one. Markets tend to do best during periods of calm and less well when share prices are whipsawing around.  says Russ Mould, AJ Bell Investment Director

“The good news is that 2003 and 2009 both saw the end of long bear markets as the FTSE 100 found its footing and embarked upon fresh gains.

“This year has already seen 12 open-to-close movements of 2% or more and seven of those have been declines against five increases, so those investors tempted to buy on the dips will be hoping this year’s action is similar to the final capitulation selling witnessed in 2003 and 2009 before markets started to head north again.”

These articles are for information purposes only and are not a personal recommendation or advice.