Could The FTSE 100 Be About To Collapse?

Royston Wild considers where the FTSE 100 (INDEXFTSE: UKX) could be headed next.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

After enjoying a handsome relief rally towards the end of January, another hefty downleg in stock indices has dominated the headlines once again in recent sessions.

Just today the dash from ‘riskier’ assets into safe-havens like gold has seen the FTSE 100 (INDEXFTSE: UKX) sink to around the 5,600-point marker, a level not seen since November 2012 .

A plunge through this psychologically-critical level is likely to see fresh buckets of blood on the trading floor, a scenario that — in my opinion at least — would appear to be an inevitability, as fears concerning harsh cooling across the global economy click through the gears.

Should you invest £1,000 in Tesla right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesla made the list?

See the 6 stocks

Drillers, diggers and banks still diving

Somewhat inevitably, the FTSE 100’s latest shunt lower has been driven by further weakness across natural resources stocks.

Dedicated copper miner Antofagasta has led the way down with a 9% slump from Monday’s close. And commodity clangers Anglo American, Glencore, BHP Billiton and Rio Tinto make up the remainder of the top five losers in Tuesday’s session.

The continuation of the severe, multi-year downturn across the metals and energy stocks comes as no surprise as recent manufacturing data from China indicates an increasingly-bumpy economic landing.

And investors are being given little reason to expect a turnaround in commodity values as major producers across the oil and mining industries steadfastly refuse to curtail rampant production levels.

But raw materials producers have not been the sole culprit in dragging the FTSE lower — indeed, the index’s heavy weighting towards the banking sector has also been cause for much of the recent weakness.

Predictions of escalating PPI-related penalties at the likes of Lloyds and RBS has added to creaking investor appetite, while concerns over slowing emerging markets has driven HSBC and Santander firmly lower.

Profit warnings pounding higher

Market sentiment hasn’t been helped by a spate of worrying financial updates in recent weeks. FTSE 100 plays AstraZeneca, Pearson and Royal Dutch Shell have all released profit warnings since the start of the year, and Rolls-Royce is expected to be the latest member of the club later this week.

Consultancy EY advised late last month that British-listed companies issued 313 profit warnings in 2015, up from 299 in the prior 12 months. And the number of warnings released between October and December clocked in at 100, the highest quarterly total since the start of 2009. And the signs are ominous looking ahead as macroeconomic troubles persist.

Alan Hudson, EY’s head of restructuring for UK & Ireland, said “Many of the challenges that dominated last year — oil, China, and the emerging markets — have continued into 2016.” And Hudson added that new factors, such as the upcoming ‘Brexit’ referendum, have thrown more mud into the water.

Fortune favours the brave

But while fresh turbulence for the FTSE 100 is just about guaranteed in my opinion, I believe that now is a great time for investors to pick up some great blue-chip stocks that are currently going for a song.

The likes of Diageo, Vodafone and BAE Systems, for example, are all top-quality operators with great growth prospects, but which have been washed out as part of the wider bear market enveloping global indices. These three stocks in particular are currently dealing at multi-month lows. Indeed, Vodafone is changing hands at levels not seen since the end of 2014.

As ever, investors should always look past near-term share price bumpiness and consider the long-term returns on offer. And there are still plenty of stunning stocks to be found at terrific prices across each of the major FTSE indices.

Should you buy Tesla now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended AstraZeneca, Diageo, HSBC Holdings, Rio Tinto, and Royal Dutch Shell. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

Here’s the Tesco share price forecast for the next 12 months!

Tesco's valuation has dropped to multi-year lows after recent share price weakness. Is now the time to consider buying the…

Read more »

Illustration of flames over a black background
Investing Articles

Just released: March’s higher-risk, high-reward stock recommendation [PREMIUM PICKS]

Fire ideas will tend to be more adventurous and are designed for investors who can stomach a bit more volatility.

Read more »

Investing Articles

I asked ChatGPT for the best FTSE 100 investment trust to buy… here’s what it said

There aren't many FTSE 100-listed investment trusts and according to ChatGPT there’s only one winner. Dr James Fox explores.

Read more »

Investing Articles

How much should investors put in an ISA to achieve the average UK wage in passive income?

Millions of Britons use the Stocks and Shares ISA as a vehicle to build wealth, but a successful investor can…

Read more »

Investing Articles

2 cheap FTSE dividend stocks to consider buying for an ISA

The deadline for using up the Stocks and Shares ISA allowance is almost upon us. Paul Summers has spotted two…

Read more »

Investing Articles

£20k in a Stocks and Shares ISA? Here’s how an investor could target £1,342 in passive income each month

Christopher Ruane explains how a long-term approach to investing a Stocks and Shares ISA could generate a four-figure monthly income.

Read more »

Shot of an young Indian businesswoman sitting alone in the office at night and using a digital tablet
Investing Articles

Millions are missing out on ISA account benefits! Here’s what I’m doing now

Swathes of people are missing the chance to supercharge their returns with a Stocks and Shares or Lifetime ISA account.…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Here’s my plan to survive and thrive in a stock market correction

A falling stock market can be an opportunity, but investors need a plan. Stephen Wright shares his strategy for taking…

Read more »