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2 April was dubbed a ‘Liberation Day’ by the US administration. On that day, President Trump announced a wide range of tariffs to be imposed on nations around the world. The FTSE 100, along with other global financial markets, fell in the immediate aftermath.
The volatility in the weeks since has been high. But if an investor had bought an index tracker on the day, here’s how it would currently look.
A wild ride
I will assume the investor bought at around 9am on the fateful morning, with a buying price of 8,591 points. Using the current level of 8,462 points, they’d only be modestly down. With a £1,000 notional investment, this would equate to an unrealised loss of £15, worth £985.
Some might flag up that we’re only talking about a period of three weeks, so not much movement would be expected. Yet the volatility in this period has meant the index has traded down to 7,550 points! At that point, the investor would have been down almost 14%. The whipsaw price changes make it difficult to know when to buy and when to sell. Yet as the old adage goes, time in the market beats timing the market.
Despite the loss from the FTSE 100 tracker, not all constituents have fared as badly. The tariff-induced market fall heavily impacted stocks that trade with the US, but other shares have rallied from the start of the month. This is where active investing can be more effective than being passive.
Individual outperformers
For example, let’s consider Marks and Spencer (LSE:MKS). The stock’s up 23% over the past month and has risen by almost 60% in the last year.
It’s true that the business is somewhat exposed to the tariff news. Earlier this year, the firm launched Percy Pig sweets in partner stores across the US, as part of an international growth strategy. These will likely have to be priced higher, which could reduce competitiveness. This is a risk going forward, but it’s not a huge financial impact when I look at the business as a whole.
The latest trading statement from the beginning of the year showed a strong final quarter, with total group sales up 5.6% from the year prior. It spoke about how the company has sustained “trading momentum”, something that investors think will continue this year and beyond.
Importantly, sales are growing in different areas, across food, fashion and homewares. This diversified product set makes it well placed to serve a wide range of customers.
Despite the market volatility since the start of the month, investors can continue to find good opportunities to buy FTSE 100 shares. Even though I’d consider staying away from buying an index tracker, stocks like Marks and Spencer are worth a closer look for potential future gains.
