The pandemic took us all by surprise in 2020 and had a massive impact on global stock markets. The FTSE 100 shed over 2,000 points in the space of a month, hitting its pandemic low of 5,190 on Friday 20 March 2020.
So, how has the FTSE 100 performed in the two years since then? And how is the UK’s largest share index likely to perform for the rest of 2022? Let’s take a look.
[top_pitch]
How did the FTSE 100 react to the pandemic?
Study a FTSE 100 performance graph and you’ll see that 21 February 2020 was the date on which investors began to appreciate the severity of the Covid-19 pandemic and its potential to wreak havoc on the global economy. Such fears were not misguided of course.
As we know, Covid-19 had a massive impact on our lives and caused huge pain for the global economy. Two years on, we still haven’t fully put the pandemic behind us.
On that chilling day in February 2020, when the FTSE 100 first started to fall, the share index went from 7,403 to 6,580 in the space of the week. Yet, looking back, we know that the FTSE 100 still had much further to fall.
By 6 March, the index’s value had fallen to 6,462, before tanking to 5,336 by 13 March.
By 20 March 2020, the official date of the FTSE 100’s pandemic low, its value had fallen to 5,190. This was the lowest the share index had been since September 2011.
How did the FTSE 100 fare for the rest of 2020 and 2021?
In hindsight, investors who bought a FTSE 100 index tracker fund in March 2020 made a very shrewd decision. That’s because the FTSE 100 mounted a mini-recovery for the rest of 2020, despite the ongoing uncertainty surrounding the pandemic.
By 5 June, the FTSE 100 had risen to 6,484 points, shaking off further falls in October to end the year at 6,460.
As for 2021, it’s fair to say that the share index also performed fairly well. That’s despite ongoing concerns surrounding future waves of the virus, as well as the potential for new variants to emerge.
By 1 April 2021, the FTSE 100 hit 6,737 points. Fifteen days later and the share index rose further, surpassing 7,000 points for the first time since the pandemic began.
At the beginning of June 2021, it stood at 7,609, and it settled at 7,384 by the end of the year.
How has the share index performed so far in 2022?
Because of the FTSE 100’s encouraging performance since the pandemic began, investors would have been forgiven for thinking 2022 would be a strong year for the stock market. That’s because many believed 2022 would be the year of the ‘post-pandemic boom’.
However, this has not turned out to be the case. As of Tuesday 22 March, the FTSE 100 stands at 7,475.
While this is 44% higher than its pandemic low in March 2022, the index stands lower today than it did at the start of the year, having fallen 0.4%.
[middle_pitch]
How might the FTSE 100 perform in future?
While the stock market is unpredictable, there is every chance the FTSE 100 can perform strongly for the rest of 2022. However, for this to happen, investors will want to see evidence that the world is finally moving on from the pandemic.
On a similar note, an end to the war in Ukraine, falling unemployment figures and lower inflation are other factors that could send stock markets soaring this year.
However, the opposite is also possible. If the war in Ukraine escalates, unemployment increases and/or the inflation rate rises further, then it’s possible the FTSE 100 will end the year even lower.
How can you invest in the FTSE 100?
If you want to invest in the FTSE 100, you have two main options.
1. Buy a FTSE 100 exchange-traded fund (ETF)
A FTSE 100 ETF will track the collective performance of companies in the FTSE 100 index. So, if the stock prices of FTSE 100 members rise, you’ll benefit. Obviously, if prices fall then the value of the ETF will do the same.
To buy a FTSE 100 ETF, you’ll need to find a share dealing platform and choose the appropriate fund. Hargreaves Lansdown is a popular option due to its low fees.
2. Buy shares in individual FTSE 100 members
If you don’t want to buy an ETF, then you can instead buy shares in individual members of the FTSE 100. To do this, you can open a share dealing account and choose the FTSE 100 member(s) you wish to invest in.
As with any investing, keep in mind that the value of your investments can rise and fall. If you haven’t invested before, then do take a look at The Motley Fool’s investing basics guide to put yourself on the right path.
