It’s been a tale of two contrasting stock markets so far in 2023. In the US, the broad-based S&P 500 and growth-heavy Nasdaq have been on fire. They’ve surged 15% and 31%, respectively, year to date. By comparison, FTSE 100 shares collectively are flat as a pancake.
But that doesn’t tell the whole story. The breathless US stock market rally has largely been driven by a small cluster of gigantic tech stocks — Nvidia, Microsoft, Meta, Tesla, Apple, and so on — plus a few other companies that are benefiting from generative artificial intelligence.
Meanwhile, the FTSE 100’s sideways action in 2023 belies significant moves in certain share prices.
Here, I’m going to take a look at the Footsie’s top risers and fallers so far this year.
Big winners
According to data from Fidelity, the five biggest risers have all made gains of 39% or more.
Rolls-Royce (+62%) has been the standout performer. It’s followed by 3i Group (+46%), Melrose Industries (+45%) Flutter Entertainment (+41%) and B&M European Value Retail (+39%).
The thing that jumps out to me here is the variation in these outperforming stocks. This is at odds with the US market, where nearly all the gains have been concentrated in the technology sector.
So, as much of a cliché as it may sound, it really has been a stock-picker’s market when it comes to FTSE 100 stocks this year. And it shows how astute stock-picking can still deliver handsome returns, even in a sluggish market.
Banking crisis interlude
Despite its apparent stillness, the Footsie did experience massive volatility throughout March. This followed the unfolding of the banking crisis in the US, which sent shockwaves through the global financial system.
Nevertheless, FTSE 100 bank stocks have held up remarkably well this year. Asia-focused HSBC and Standard Chartered are up 23% and 10%, respectively.
But throw in the dividends too, and all Footsie banks have delivered positive total returns year to date.
So, unlike in years gone by, UK-listed banks appear much more stable and resilient today.
Big fallers
No single FTSE 100 stock has declined more than 26%, according to my data provider.
Loss-making Ocado (-25%) has been the biggest faller, and narrowly survived demotion to the FTSE 250 in the latest index reshuffle. A close second is Fresnillo (-24.5%), followed by British American Tobacco (-19%), Anglo American (-19%) and Johnson Matthey (-16%).
The sector theme here is mining, with Fresnillo and Anglo American both declining after the cooling of last year’s commodity boom.
Opportunities
My strategy for the rest of the year is to focus almost entirely on cheap high-yielding UK shares.
Funnily enough, this will be the polar opposite of what I was doing last year (and in the early weeks of 2023). Then, I was buying beaten-down US tech stocks, including Nvidia, Tesla, Alphabet and Adobe.
This is the beauty of being a long-term investor. There are almost always opportunities somewhere, in this sector or that one, here or in the US. It just requires patience and an open mind.
As Warren Buffett famously observed: “The stock market is a device for transferring money from the impatient to the patient.”
Looking around the UK market today, I’ve never been more optimistic that great long-term returns can be achieved from picking stocks!
