It Is A Bear(ish) Market

The FTSE 100 opened today at 5673 where it went into negative territory just after 9am before climbing up where it closed at 5773 (+1.77%).  Pearson, a FTSE 100 company within Media, announced today that they will be cutting 4,000 jobs, 10% of which will be from the UK.  The group also announced a profit warning for both their 2015 and 2016 financial year and have cut its earnings guidance for the market.  The market reacted positively as the company’s share price rose on the news.  Analysts believe the rise is due to investors being able to see where the company is heading, they are also pleased the company is acting on both their internal and external challenges.  Pearson eventually closed up at 772p (+17.41%).

It has been a disappointing start to the year for investors as they have been watching the FTSE 100 corrode away, along with their investments.  Since the beginning of the year the FTSE 100 has fallen in value by over £140billion, yesterday alone saw £52billion wiped off the value of shares from the UK market as the price of oil continued on its downward spiral trend.  Although, at the time of writing, Brent oil is up (+5.86%), the volatility within the oil market has still left investors feeling uncomfortable as analysts can’t see through the thick fog of uncertainty.  Nevertheless, the increase in the price of oil and other commodities such as copper have had a positive effect on companies like Glencore, Anglo American, BHP Billiton and Tullow Oil which all saw their share price increase by +15.52%, +12.19%, +10.66% and +9.31% respectively.

Investor’s decision to bolt from the equity markets has led indices to fall into a bear market as the FTSE 100 has fallen by just over 20% since it peaked in April last year.  The DAX and CAC 40 have both fallen by just over 20% since their peaks, as has the Nikkei 225 which peaked in June 2015.  The Hang Seng has fallen by 35% since peaking in April 2015.  Global indices have recovered some of yesterday’s losses but there is little indication that investor’s are done fleeing the equity markets.  Maybe they should follow the advice of Yogi Bear…. “Another golden rule is: don’t lose your cool” in times of uncertainty.

At the close, European indices were up with the FTSE 100 +1.77%, the CAC 40 +1.97%, and the DAX +1.94%.  Asian indices were down for the day with the Hang Seng -1.82% and the Nikkei 225 -2.43%.  At the time of writing, US indices were up with the NASDAQ +0.85%, the S&P 500 +1.50% and the Dow Jones +1.58%.