It has definitely been a wild March for the FTSE 100 index. 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.
Nonetheless, 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 monitor? Let’s talk about.
What’s the most recent?
Clearly the occasion that triggered all of the inventory market uncertainty is the Iran warfare. Or, extra particularly, the dearth of transport 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 reveals the financial harm that could possibly be brought on by a protracted battle. Europe (together with the UK) and Japan are notably susceptible to excessive oil costs.
Supply: Vanguard
As we’re all conscious, issues change hour by hour with President Trump’s insurance policies. The newest is that Iran has — unsurprisingly — rejected a 15-point plan from Washington to finish the battle.
For sure then, it’s too early to inform whether or not the FTSE 100 is again on monitor. We don’t but know the inflationary harm to the UK economic system or whether or not the US and Iran are even speaking to 1 one other.
Both method, rates of interest are probably going up in 2026. So buyers in all probability aren’t going to be within the temper for higher-risk property.
However that may profit the FTSE 100 to some extent, because it’s low cost and plenty of constituents pay beneficiant dividends (the index yield has climbed to three.2%).
Some may be completely happy to purchase low cost FTSE 100 blue chips, gather any dividends, and await a possible snapback rally later this 12 months. If that’s the case, buyers may take into account 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, have a look at this chart beneath from Scottish American Funding Firm (LSE:SAIN), or ‘SAINTS’. It reveals how the FTSE 250 funding belief has pumped out inflation-busting dividends for a lot of many years.
Supply: SAINTS
There have been a number of oil crises, recessions, and inventory market crashes over this era. And a few very scary geopolitical occasions. But a lot of the shares SAINTS invested in proved resilient sufficient to pay rising dividends.
And the inventory market went up and to the proper over time.
However is SAINTS value contemplating at this time? I reckon it may be for buyers in search of a gradual dividend-paying belief that goals to develop revenue above inflation. Yielding 3.25%, it has elevated the payout for 52 consecutive years.
High holdings embrace Taiwan Semiconductor Manufacturing, Apple, Microsoft, and Procter & Gamble.
That stated, efficiency has been disappointing currently, with SAINTS’ ‘quality’ investing fashion out of favour. Final 12 months, the share value returned simply 6.8% versus the FTSE All‑World Index‘s complete return of 14.7%.
If efficiency doesn’t choose up, extra buyers may dump the shares, widening the present 8.2% low cost to web asset worth.
On steadiness, nonetheless, I believe the potential rewards outweigh the dangers. Final 12 months, shareholders loved a 7% improve within the dividend, twice the speed of inflation.
