25th January 2022

Calm descends on FTSE 100 but investors still brace for volatility ahead

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown, comments
"’A calm before another potential storm has descended on the FTSE 100 which has risen 0.6% in early trade as bargain hunters head out to try and capitalise on yesterday’s losses. Some of the companies’ marking out the biggest falls yesterday are among the top risers today including mining and travel stocks, with Rolls Royce also regaining ground, following airlines up on a recovery trajectory. Tech heavy Scottish Mortgage Investment Trust, also reversed some of yesterday’s losses but it’s still down 20% year to date.

Investors are still bracing for a fresh bout of volatility this week, following the rollercoaster ride on Wall Street and fresh falls in Asia. Although indices lurched haphazardly back into positive territory on the Nasdaq and S&P 500, a heightened sense of nervousness remains about just how tough the Federal Reserve will talk and act to try and get increasingly troublesome inflation under control. The deteriorating situation in Ukraine with the stand-off continuing as diplomats moves falter, is adding to heightened tensions on the markets, with fears a conflict could unleash a fresh front of chaos, including making the energy crisis facing Europe even worse.

A string of corporate results for some of the beasts of tech, such as Microsoft, Apple and Tesla could either quell fears about valuations tumbling further or build up a barrier of support around the sector. Microsoft will report later and expectations will be high given how accustomed investors have become to outstanding results, with double digit growth in every division in the last quarter. With such high bars set, falling short of expectations could set off a fresh round of selling."

Hargreaves Lansdown Trends(36 articles)