In 2020, the UK index dropped by 14.3%, the worst results of the major foreign stock indices.
As the Covid 19 pandemic and Brexit volatility weighed on equities during a volatile 12 months for investors, Britain’s blue-chip inventory index experienced its worst year since the 2008 financial crisis.
In 2020, the FTSE 100 index of London’s top stocks dropped 14.3 percent, the worst result among the world’s largest stock indices and the largest decline since 2008.
The pound, on the other hand, rose in more than two and a half years to its highest level against the U.S. dollar despite relief from the U.K. free trade agreement. And they agreed with the EU.
The Footsie closed down at 6,460 on New Year’s Eve after beginning the year at 7,542. In the final trading session of the year, fresh worries about the new UK restrictions on Covid 19 helped bring the market down almost 1.5 percent.
A relative scarcity of technology stocks caused the FTSE 100 to suffer. As the pandemic pushed office staff to work from home, they surged in 2020, triggering a boom in video conferencing and online shopping.
During the year, the parent company of British Airways, IAG, dropped 61 percent, and engine manufacturer Rolls-Royce lost 52 percent. Oil producers had a tumultuous year as well, with over 40 percent of BP and Royal Dutch Shell falling in 2020.
Banks were also hit hard by the pandemic, as well as by concerns that a free trade deal would not be achieved between the UK and the EU.
In the last 12 months, Lloyds Banking Group dropped 41 percent, while NatWest fell 30 percent.
“The sectors most affected by the pandemic were: Travel, Leisure, General Retail, Energy and Banking, all of which make up a significant portion of the FTSE 100, pretty well sum up why the FTSE 100 has been hit so hard, and that’s before we even consider that the Brexit transition period is coming to an end at the end of this year,” said Michael Hewson of CMC Markets, a spreadbetting company whose cl cl cl
Investing in technology firms such as Tesla, Amazon and Tencent, the Scottish Mortgage Investment Trust was the highest performing stock in the FTSE 100, having more than doubled its value in 2020. Since last January, Ocado, the online grocery company, is up 78 percent.
The U.S. stock market has reached a number of record highs in recent weeks while the FTSE 100 struggled. The S&P 500 finished the year at a record peak, up 16.26 percent, while 43 percent was up for the tech-heavy Nasdaq.
The DAX of Germany finished the year up 3.6 percent, while the CAC of France fell about 7 percent. Japan’s Nikkei rose 16%, while in 2020, China’s CSI 300 gained 27%.
Spain’s IBEX 35, however, had an even worse year than the FTSE 100, dropping by 15.5 percent .
The weakness of the FTSE 100 was partially due to the strength of the pound, which undermines the importance of overseas earnings from multinationals.
As the U.S. dollar weakened on foreign exchange markets, the pound reached $1.3686, its highest level since May 1, 2018.
Many analysts have forecast that as the introduction of the Covid-19 vaccines fuels an economic rebound, the FTSE 100 will rally.
By the end of 2021, investment bank UBS has a target price of 7,200 points.
The recovery will take time, said David Miller, investment director at asset management company Quilter Cheviot. People will not immediately regain confidence, get on an airplane or go to a packed soccer stadium.
Until normality returns, it will take until the second half of 2021, maybe even the second half,’ he said.
Mid-sized businesses’ FTSE 250 index, which focuses more on the U.K. In 2020, the economy dropped 6.4 percent to reach a 10-month high earlier this week.
The FTSE 100 has recovered since its March low, when it briefly dropped by 5,000 points, although it ended the year lower.
“Although market timing is never easy and can be risky, buying opportunities such as March rarely occur, and successful investors need to grit their teeth and have the courage of their convictions at such times,” said Tom Stevenson, Fidelity International’s investment director for personal investments. “Even the underperforming U.K. market is up more than 25 percent since the bottom.”
Joshua Mahony, senior market analyst at IG, said investors would be excited about the extended Covid 19 restriction period and the “clearly clear” by the end of 2020.