Another good year for equity markets

1st January 2014

For a year that started off with concerns about another euro crisis and a triple dip recession in the UK, developed equity markets performed strongly in 2013.

Index 2013 Change
FTSE 100 +14.4
FTSE All-Share +16.7
Dow Jones Industrial +26.5
Standard & Poor's 500 +29.6
Nikkei 225 +56.7
Euro Stoxx 50 +17.1
Hang Seng +2.9
MSCI Emerging Markets (£) -6.7

The performances shown above hide several factors which could be important in 2014:

  • Another poor year for the commodity-based multinationals was one major reason why the UK stock market failed to keep pace with the US. There is little expectation of a commodities rebound in 2014.
  • The more UK-centric businesses again did much better, witness the performance of the FTSE 250, which measures the 250 companies below the top 100 – about 15% of the UK stockmarket. The FTSE 250 gained 28.8% in 2013, which explains why the broader FTSE All-Share Index repeated its 2012 out-performance of the more widely quoted FTSE 100.
  • Sterling had a good year, which reduced the returns for UK investors in many foreign markets. This was very noticeable in Japan, where sterling rose by 24.9% against the Yen. Even against the dollar the pound added 1.9%. There is now some concern that the strength of sterling will start to hit UK exports.
  • Emerging markets had a generally disappointing year, witness the fall in the MSCI index. The US Federal Reserve’s plan for tapering QE (see below) worried investors in emerging markets, particularly those which rely on foreign capital inflows.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.

Related Articles

Making a Will during COVID-19

Thinking about how well we are prepared for our futures As coronavirus (COVID-19) leaves many of us working from home surrounded by our families and loved ones, it is inevitable that we start to think about how well we are prepared for our futures.

Read more

Bank of Mum and Dad

Make sure you can afford it and understand any tax implications Parents have always supported their children in lots of different ways. These days, growing numbers of parents see their adult children struggling to build up enough in savings to put down the deposit on a house or to afford to move up from a first home to something larger – but does this mean parents should help financially?

Read more

Festive Financial Gifts

Deciding on the right investments for the children in your life As the festive season approaches, have you thought about gifting your children or grandchildren something different this Christmas? Giving them a good start in life by making investments into their future can make all the difference in today’s more complex world.

Read more