UK stocks have had a bumpy run with the FTSE 100 falling 4.4% over the past six months. It’s still up 8.81% over one year, but why the recent reversal?
As ever, there’s a host of factors at play. China is a big one. The world’s biggest economy continues to struggle despite a string of stimulus packages from Beijing. I’ve seen a direct impact on a number of FTSE shares in my self-invested personal pension (SIPP).
During the boom years China consumed 60% of global metal and mineral production. That source of demand has slipped, hitting revenues at mining giant Glencore. Chinese shoppers are also consuming less in a blow for luxury fashion house Burberry. These two stocks have plunged 18.37% and 48.05% respectively over 12 months.
The FTSE 100 is down but it’ll be back
The run-up to the first Labour Budget in 14 years also hit the FTSE, as businesses and consumers worried about tax hikes. On Friday, we saw the impact on the UK economy. After climbing 0.7% in Q1 and 0.5% in Q2, GDP growth slumped to just 0.1% in Q3. In September, the economy actually shrank 0.1%.
The pain could drag on as businesses face £25bn of national insurance hikes from April. Another SIPP holding, JD Sports Fashion, slipped as a result. It employs more than 50,000 people in the UK and higher labour costs will squeeze margins. Its shares are now down 16.59% over 12 months.
The US presidential election result boosted US markets but had a mixed reception in the UK, Europe and beyond, as investors fret over Donald Trump’s proposed tariffs.
Pharmaceutical giant GSK, another SIPP holding, was hit by Trump’s move to nominate anti-vaccine activist Robert F Kennedy Jr to lead the US Department of Health and Human Services. Its shares are down 12.92% in a month, and 6.59% over the year.
I’m not going to sell any of these stocks though. I believe they’re good companies that have been hit by forces beyond their control. In time, I think they’ll be back.
The same applies to consumer goods giant Unilever (LSE: ULVR). Its shares were in recovery mode but have now fallen 6.68% over the last month. Happily, they’re still up 16.69% over 12 months.
The Unilever price recovery has stumbled
On 24 October, Unilever reported a 4.5% jump in third-quarter underlying sales, led by power brands Dove, Comfort and Magnum. This beat analyst expectations of 4.2% growth.
It still expects full-year sales growth to range from 3% to 5% as CEO Hein Schumacher puts the business back on track by “doing fewer things, better and with greater impact”. He’s still got some way to go though.
The obvious worry is that Unilever will get hit by US tariffs. North America contributed 19% of its total turnover last year and is one of its top three priority markets, along with India and China.
Some of the impact is priced in with the Unilever share price after the recent dip. I’ll take advantage by topping up my stake as soon as I can. Then I’ll go hunting for more FTSE 100 bargains, because there are plenty out there today.
