It’s been a brutal day for the FTSE 100 index. As I write, the Footsie is down 160.73 points (-2.2% ) today to trade at 7,277.36 points. This latest decline was driven by big drops in the US yesterday. The S&P 500 index lost 4% of its value on Wednesday, its biggest one-day decline since June 2020. And the tech-heavy Nasdaq Composite index closed down 4.7%. Ouch.
The FTSE 100 has been 2022’s safe haven
Here’s how the FTSE 100 has performed against four other major stock market indices in 2022 and the past 12 months (sorted by 2022 change).
| Region | Index | 2022 change | 12-month change |
| UK | FTSE 100 | -1.8% | 4.7% |
| Japan | Nikkei 225 | -8.3% | -6.0% |
| Europe | STOXX Europe 600 | -12.8% | -2.3% |
| USA | S&P 500 | -18.6% | -5.7% |
| USA | Nasdaq Composite | -27.6% | -14.9% |
The FTSE 100 has been a relative safe haven so far in 2022, as well as over one year. It’s down under 2% this calendar year, versus a near-28% loss for the Nasdaq Composite index. What’s more, it’s the only major market index of these five to have risen over the past 12 months. Adding dividends of, say, 4% to the index’s 4.7% gain takes the Footsie’s 12-month return to around 8.7%. To me, that’s pretty impressive, given the market crashes elsewhere.
Bargain hunting in the Footsie
Looking at the FTSE 100’s constituents this afternoon, I see screens of red. Almost all shares in the index are down today. In fact, only seven of the 100 Footsie shares are up today, with gains ranging from 0.1% to 2.5%. Hardly a good day for UK shareholders, huh?
But the losing end of the FTSE 100 is grabbing my attention this afternoon. Among these losers, 20 shares are down at least 3.8% today, while seven Footsie stocks have lost more than 5% of their value. And all because investors are worried that the US stock market is sneezing and, therefore, London will catch a nasty cold.
Four Footsie bargains I’d buy today
As a contrarian/value/income investor, I’m always looking to buy into quality companies at discounted prices. Here are four shares I don’t own that have tumbled in value today.
| Company | Sector | Share price (p) | 12mth change | Market value (£bn) | Price/ earnings | Earnings yield | Dividend yield | Dividend cover |
| Royal Mail | Postal services | 298.99 | -43.1% | 2.9 | 3.4 | 29.2% | 5.6% | 522% |
| Unilever | Consumer goods | 3421.10 | -20.1% | 87.5 | 17.4 | 5.7% | 4.2% | 136% |
| Diageo | Alcoholic drinks | 3565.50 | 6.5% | 81.7 | 27.4 | 3.6% | 2.1% | 176% |
| Tesco | Supermarket | 255.80 | 10.4% | 19.5 | 13.0 | 7.7% | 4.3% | 180% |
Royal Mail Group is the worst performer in the FTSE 100 today, after its share price slumped 12.4%. Meanwhile, Unilever shares are down 4.5% today, while Diageo stock is -5.3% and Tesco shares have lost 0.9% (having bounced back since this morning’s open).
To sum up, I’d buy all four of these FTSE 100 shares today, both for their dividend income and future earnings growth. Each is a market leader in its particular field, which may offer some security in these troubled times. Then again, all four face similar worries: inflation (rising consumer prices), slowing economic growth, recession risk, etc. Yet, despite these risks to these companies’ earnings and their share prices, I’d gladly buy all four stocks today!
