How low can the FTSE sink in 2019?

STOCK markets will continue their rollercoaster ride well into the new year experts predict, as 2018 draws to a close with major indices down for the year.

Although would markets rallied last week, it was of little relief for investors, who have been left nursing losses for the year.

On Friday, the FTSE 100 index closed at 6733.97, down 12.4 per cent for the year, while America’s S&P 500 finished 7.4 per cent lower at 2485.74.

The MSCI Global index, which represents large and mid-cap stock markets in 23 countries, has fallen 11 per cent since the start of the year.

FXTM research analyst Lukman Otunuga described the final trading week of 2018 as “explosively volatile and wildly unpredictable” due to continuing concerns about slowing global growth, trade wars, Brexit and a partial US government shutdown.

He said: “Although US stock markets bounced back to life to end positive and Asian shares traded mostly higher this morning, it is certainly too early for any celebrations. With investor appetite for riskier assets seen diminishing amid the unfavourable market conditions, global equity markets remain vulnerable to downside shocks.”

CMC Markets analyst David Madden said: “The year saw a lot of volatility in terms of stock market price action. The outlook for the global economy was looking better in the first half than it is now. As global stock markets are off their highs, and there are some concerns about global growth, 2019 is likely to start off on a softer note.”

However fund manager Rathbones’ head of asset allocation Ed Smith said that while the markets are right to be concerned about geopolitical risks, investors need not panic. He pointed out that the global economy will continue to grow, albeit at a slower pace, while wages and employment are continuing to grow faster than historical trend.

“We still believe some caution is warranted, but not the kind of fear that seems to have taken hold as the year draws to a close,” he said.