When will the FTSE 100 fully recover from the stock market crash?
Investing in the stock market this year has been the toughest task for a long time. For several years prior to 2020, the market was characterised by moderate volatility, but with a long-term trend higher. This meant that even by simply buying a FTSE 100 tracker fund, you’d have likely made money. After the stock market crash of March 2020, this changed. The decade-old bull run ended swiftly, and the long-term trend broke down. This raises a very valid question: when will the FTSE 100 fully recover?
The FTSE 100 index hit an all-time high around two years ago, at 7,877 points. A full recovery from the current situation doesn’t mean that we have to hit new all-time highs. For many, a full recovery would be seeing the market back at the position it was before the crash happened. From that point of view, we’d be looking for around 7,400 points.
Aside from the index level, a full recovery would be called when companies no longer see Covid-19 as having a significant negative impact on revenues. In most of the trading updates for the first quarter that I’ve read, firms have flagged this up. As an example, Carnival Cruises made a gross profit of over $7bn last year, yet expects to make a net loss this year.
Given that the FTSE 100 is a barometer for sentiment in the broader economy, I’d expect the market to have recovered losses when we see economic data improve. At the moment ...
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