FTSE has its most volatile start to the year in over 20 years

23rd February 2016

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The FTSE 100 has had its most volatile start to a year in over two decades, analysis has shown.

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, research by pension specialist A J Bell has found.

The fluctuations have occurred even 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.

Russ Mould, investment director at AJ Bell, says: “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.

“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.”

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