The Motley Fool

Next stop 4,000 for the FTSE 100? Here’s why it might happen

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Close up of newspaper headline for financial crisis news
Image source: Getty Images.

As crystal balls are scarcer than toilet paper right now, no one has any idea when markets might recover. It could take a few weeks, a few months or, yes, even a few years. 

Without wishing to depress Foolish readers further, I don’t even think we’ve hit the bottom yet. Indeed, I think there’s certainly a chance that the FTSE 100 could fall to a level not seen since the Financial Crisis. And that’s regardless of how much support is promised by Boris Johnson and his government.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Cases rising

It seems clear that the number of people testing positive for coronavirus won’t suddenly diminish, particularly in the UK and the US. Tragically, the number of people dying in countries such as Iran doesn’t show any signs of slowing either.

Clearly, I’m not a virologist and have no better understanding of the likely trajectory of the virus than you. Not even the experts are sure as to whether it will prove less resilient when the warm weather arrives over the next few months (if that happens in the UK!). That just shows how difficult it is to be confident about anything right now.

This state of affairs is made worse by the possibility that countries seemingly successful in containing the outbreak like China could see a ‘second wave’ as people return to work. No one knows. And because investors hate uncertainty, I think further falls are more likely than not for this reason alone.

Not in the numbers

While the market has reacted to the coronavirus by predicting a significant slowdown in economic growth, we don’t know the full extent of this and won’t for a while yet. Only once companies start posting earnings updates over the next few months will it be possible to calculate the true cost.

Considering that few of us will now be inclined to visit bars and restaurants, high street footfall in major UK cities has already tumbled. Sporting events have also been cancelled or postponed, so the damage could be extreme. With consumers in defensive mode, many established businesses could go to the wall. Redundancies will likely soar. 

Some of this is already baked in. We just don’t know by how much.

In other news…

The coronavirus isn’t the only problem investors have on their minds at present. The recent tanking in the price of oil, thanks to tensions between Russia and Saudi Arabia for example, is another thing that’s got people worried.

In one sense, this fall should be good for the global economy. However, with so many people in lockdown, there’s no one to take advantage. Somewhat ironically, news like this would usually send airline stocks flying higher. 

Combine this with the possibility of a no-deal Brexit later in the year and the uncertainty surrounding the US presidential elections, and 2020 looks like being one of the worst years for investors for a very long time.

That’s not to say there won’t be rallies along the way. The fact that we saw a huge bounce last Friday is, from a psychological point of view, perfectly normal. Fear begets greed (and vice versa) and indexes don’t bottom out immediately. You’ll find plenty of points between 2007 and 2009 where markets briefly moved higher only to fall even lower. 

FTSE 100 at 4,000? I wouldn’t rule it out.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.