Today the Footsie had one of its best days ever, rising 3.7 percent, which added £60 billion to the value of the UK’s leading 100 companies. Laith Khalaf, Senior Analyst, Hargreaves Lansdown.
This is the biggest risein the index since October 2011, and ranks among the top 50 days for the FTSE 100 since inception in 1984. The index has now reversed the dramatic fall witnessed on ‘Black Monday’. It’s been one of the best ever days for the UK stock market, neatly illustrating why it’s a bad idea to sell out in a market rout. Black Monday was a truly dreadful day for stock investors, but it’s been followed by big bounce, with the Footsie now back where it ended last week. Markets tend to over-react to both good and bad news, so sharp falls are often followed by strong rallies.
Markets have todaybeen buoyed by a rally in Chinese shares, a rise in commodity prices and a substantial upward revision of economic growth in the US. It would be foolhardy to suggest we’re out of the woods yet though, and share prices are likely to remain volatile for some time.
When markets are behaving erratically, investors should sit on their hands, and stick their fingers in their ears too if they can. Those who are willing to ride out some short term rough and tumble might consider topping up their holdings. In particular the market is now presenting some interesting income opportunities. The UK stock market is now expected to yield 3.9 percent over the next year, compared to 3.5 percent in May. If prices have further to fall, dividends at least provide a bit of a cushion for investors.’
