Market Movements – FTSE100

The FTSE100 index has recently experienced a decline of approximately 2.8% from its high in May. This downturn follows a significant upward trajectory in the first half of 2024, with the index rising around 8.6% between January and mid-May. The current market correction can be attributed to several factors:

1. Market Correction and Profit-Taking:

   The substantial rise in the FTSE100 index earlier this year necessitated a period of reflection and profit-taking. Financial markets often experience corrections after sustained upward movements, as investors reassess their positions and secure gains.

2. Persistent Inflation Concerns:

   Inflation, particularly in the United States, has proven to be more persistent than initially anticipated at the beginning of 2024. Early in the year, there were hopes that the Federal Reserve might implement up to six rate cuts throughout the year. However, this expectation has been significantly reduced, with projections now indicating only one or two potential cuts. This shift in monetary policy expectations has contributed to market uncertainty.

3. Political Risks:

   Political developments worldwide have also contributed to market volatility. The approaching U.S. elections, significant governmental changes in Mexico, unexpected electoral outcomes for the Modi government in India, and a rightward shift in EU elections have all raised concerns about the potential impacts on the global economic outlook.

My perspective on Market Movements

Despite these factors, the concerns driving the recent market movements may be somewhat overstated. The recent decline in the FTSE100 appears to be more of a temporary pause following the exuberance witnessed in the first five months of the year. The overall economic outlook remains relatively positive. Global growth is showing signs of recovery, and although inflation reduction has been slower than hoped, it is still progressing. Additionally, markets typically adjust quickly to political shifts, mitigating long-term impacts on financial indices.

I believe that the market will resume its upward trend after a relatively short period of time. As a result, I have placed a buy bet on the FTSE100 to capitalise on the current minor dip.

Purchase Price: 8138.04