The FTSE 100 index of shares has risen more than 12% in the year to date, touching repeated record highs in the process. It’s left a lot of market commentators scratching their heads and warning of a potential stock market crash.
Do I think a correction could be coming? I’m experienced enough to know that trying to predict near-term share price movements is a fool’s errand.
That said, there are a number of headwinds that might combine to sink the Footsie. These include:
- Signs that global trade tariffs are sapping economic growth.
- Rising inflation in key regions.
- Uncertainty over central banks’ interest rate policies.
- A rebound in the US dollar.
- Geopolitical tension in Europe and the Middle East.
The stock market may also drop as institutional investors carry out their quarterly portfolio rebalancing in September.
2 FTSE shares on my radar
As we often see during market crashes, any broad correction would likely prompt robust, quality stocks slumping alongside more sensitive and cyclical ones. This will provide a great dip-buying opportunity for bargain lovers like me to exploit.
Stock prices always recover strongly from bouts of temporary turbulence, as the FTSE 100‘s surge this year shows perfectly. This often allows investors who buy following a crash to make supersized profits over the long term as the market recovers.
With this in mind, here are two UK blue-chip shares I’ll consider buying if the index dips.
The tech trust
Scottish Mortgage Investment Trust (LSE:SMT) could be especially vulnerable in the event of a global market correction. This is because of its focus on US tech shares, whose lofty valuations could make them prime candidates for a sell-off.
Yet the trust’s long-term outlook remains highly attractive in my opinion. Nvidia, Microsoft and Meta all provide different ways for investors to make profits from the artificial intelligence (AI) boom, for instance. Elsewhere, Amazon could deliver huge returns as e-commerce continues growing, while Tesla might thrive thanks to innovations in self-driving vehicles and robotics.
I also like Scottish Mortgage because of its high concentration of companies that aren’t stock market listed like SpaceX and Databricks. This gives stock pickers rare access to high-growth private companies that would otherwise be off-limits.
A bargain bank
Standard Chartered (LSE:STAN) is already one of the FTSE 100’s best value stocks in my view. It trades on a forward price-to-earnings (P/E) ratio of just 9.5 times. And its corresponding price-to-earnings growth (PEG) sits well below the bargain threshold of one, at 0.5.
The emerging market bank doesn’t just look cheap due to expected profits, either. Its price-to-book (P/B) ratio also comes in below one, meaning it can be picked up at a discount to the value of its assets.
I haven’t invested yet because I already own HSBC shares. This is another blue-chip bank with considerable exposure to fast-growing Asian markets. But if Standard Chartered shares fall, I’ll be very tempted to open a position, even as trade tariffs threaten to disrupt near-term profits.
