It has definitely been a wild March for the FTSE 100 index. Just lately, it tanked by greater than 10%, reaching a low of 9,677 on Monday morning (23 March). For context, it was near 11,000 in late February.
Nevertheless, since Monday’s low, the index has began recovering. As I kind (25 March), it’s as much as 10,077.
So, is the FTSE 100 again on observe? Let’s talk about.
What’s the newest?
Clearly the occasion that triggered all of the inventory market uncertainty is the Iran conflict. Or, extra particularly, the dearth of delivery going by means of the Strait of Hormuz.
The longer this goes on, the more serious inflation will probably be as a consequence of disrupted oil, gasoline, and fertiliser provides. The present power disaster is maybe the worst in many years.
Analysis from Vanguard earlier this month exhibits the financial injury that may very well be attributable to a protracted battle. Europe (together with the UK) and Japan are notably weak to excessive oil costs.
As we’re all conscious, issues change hour by hour with President Trump’s insurance policies. The most recent is that Iran has — unsurprisingly — rejected a 15-point plan from Washington to finish the battle.
Evidently then, it’s too early to inform whether or not the FTSE 100 is again on observe. We don’t but know the inflationary injury to the UK economic system or whether or not the US and Iran are even speaking to 1 one other.
Both manner, rates of interest are doubtless going up in 2026. So buyers most likely aren’t going to be within the temper for higher-risk belongings.
However which may profit the FTSE 100 to a point, because it’s low-cost and lots of constituents pay beneficiant dividends (the index yield has climbed to three.2%).
Some could be completely happy to purchase low-cost FTSE 100 blue chips, acquire any dividends, and watch for a possible snapback rally later this 12 months. If that’s the case, buyers might contemplate one thing just like the Vanguard FTSE 100 UCITS ETF.
Perspective helps
When unpredictable occasions like this develop, I believe it helps to maintain some perspective as a long-term investor.
For instance, take a look at this chart under from Scottish American Funding Firm (LSE:SAIN), or ‘SAINTS’. It exhibits how the FTSE 250 funding belief has pumped out inflation-busting dividends for a lot of many years.
There have been a number of oil crises, recessions, and inventory market crashes over this era. And a few very scary geopolitical occasions. But many of the shares SAINTS invested in proved resilient sufficient to pay rising dividends.
And the inventory market went up and to the appropriate over time.
However is SAINTS value contemplating right this moment? I reckon it could be for buyers searching for a gentle dividend-paying belief that goals to develop revenue above inflation. Yielding 3.25%, it has elevated the payout for 52 consecutive years.
High holdings embody Taiwan Semiconductor Manufacturing, Apple, Microsoft, and Procter & Gamble.
That stated, efficiency has been disappointing recently, with SAINTS’ ‘high quality’ investing type out of favour. Final 12 months, the share worth returned simply 6.8% versus the FTSE All‑World Index‘s whole return of 14.7%.
If efficiency doesn’t choose up, extra buyers might dump the shares, widening the present 8.2% low cost to internet asset worth.
On steadiness, nonetheless, I believe the potential rewards outweigh the dangers. Final 12 months, shareholders loved a 7% enhance within the dividend, twice the speed of inflation.
