The FTSE 100 has got off to a less-than-encouraging start in September. The UK’s premier share index is sinking in Tuesday trade and falling further below the 6,000-point marker. In fact it’s now trading at its lowest since the middle of May. Another meltdown in UK share prices could be just around the corner.
But what could cause the FTSE 100 to erode further — or possibly even crash — in September? The key issues for investors in UK shares include:
- The possibility of more sterling strength against the US dollar. This is the chief reason behind the FTSE 100’s fall on Tuesday, the pound striking its most expensive since May 2018 against the greenback. A large number of FTSE 100 companies report in foreign currencies like the dollar, meaning that their earnings take a hit when it falls. It’s no surprise that their attraction falls in times like these, then.
- More worrying news flow surrounding Covid-19. The number of global infections continues to rise and prayers for a vaccine remain unanswered. In fact, signs of a second spike in parts of the world continue to grow as we move into September. And this is feeding fears that severe restrictions could be put in place again to stop the spread, choking off the economic recovery and hitting profits for UK shares.
- Escalating trade wars between the US and major economies. Concerns over increasingly protectionist rhetoric from Washington are nothing new. However, investor tension over the possibility of new tariffs being slapped on products from all over the globe is still damaging confidence.
Don’t fear the FTSE 100 fall
It’s clear that the FTSE 100 needs to be prepared for fresh bouts of turbulence. In fact plenty of UK shares are in danger of falling in value in September. Those fearing fresh drops might want to buy the following UK shares in something like a Stocks and Shares ISA:
- Heightened investor tension and the falling US dollar bodes well for precious metal prices. But rather than buying the commodities themselves I’d prefer to buy UK shares that dig them out of the ground. That way investors can ride the rising metal prices whilst receiving dividends in the process. You might want to pay Centamin close attention. This gold stock’s dividend yield sits at a delicious 5%.
- Buying utilities is a great idea as market confidence shakes too. Companies like FTSE 100 water supplier Severn Trent have supreme earnings visibility whatever the broader economic outlook. And this could help demand for its stock to balloon in September. This UK share yields a mighty 4.5% for this financial year.
Getting rich with UK shares
Severn Trent and Centamin are just a couple of the shares that could thrive in the near term and beyond. The Motley Fool’s huge library of special reports can help you discover even more. So do some research and get investing today, I say. You could get seriously rich and possibly even make a million over the long run.
