A tumultuous year for the FTSE 100

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From market milestones to sheer mayhem, 2015 has been the most unpredictable and volatile year of trading on the FTSE 100 since 2008.

It has been a terrific year for housebuilders but a torrid 12 months for mining stocks. The blue-chip index partied like it was 1999 back in April before wallowing in its losses in early December to its lowest close in three years.

Chris Beauchamp, an IG analyst, described the FTSE’s overall performance as “poor”, with the heavy weighting given to banks, miners and oil firms meaning that “the positive returns for many stocks was in vain”.

“For those with FTSE trackers, 2016 doesn’t look much better, with the heavy days of early 2015 a distant memory,” he said.

It’s easy to forget, however, given the recent market turmoil, that the year got off to a cracking start. The blue-chip index touched fresh highs repeatedly up until the end of April, when it broke through its dotcom bubble peak to close at 7,103.98. Investors, buoyed by the European Central Bank’s quantitative easing programme, piled into equities.

A decisive outcome at the polls at the general election in May gave investors another reason to cheer, as shares in Britain’s leading companies rallied by more than 2pc in just one day, with sectors vulnerable to increased regulatory scrutiny and a higher tax burden under a Labour government enjoying a welcome, albeit unexpected, boost.

David Cameron must articulate a vision for Britain's role in a challenging worldThe Conservatives won an unexpected outright majority in the General Election in May. Photo: Reuters

Upon reflection, the first half of 2015 wasn’t all that bad. But, come June, and the so-called Grexit drama, Chinese woes, the onset of a commodities price rout and the continued wait for a Fed rates rise lift-off left blue-chips exposed.

In the summer months, amid deep financial and political turmoil, Greece almost crashed out of the euro, before a bail-out was finally agreed. None the less, it dragged the FTSE’s leisure stocks into the red. But it wasn’t the only occasion when travel and leisure stocks, such as Thomas Cook and TUI AG, were hurt, as it was followed by the bombing of a Russian plane flying from a popular holiday resort in Egypt in October and the terrorist attacks on Paris in November.

Yet it was the unprecedented collapse in Chinese shares that resulted in the murkiest day for the FTSE this year. In just one trading session, dubbed “Black Monday” on August 24, driven by investors’ dashed hopes that Beijing would inject a fresh round of stimulus into its economy, in the wake of its surprise currency devaluation, £91bn was wiped off the FTSE’s blue chips.

Japanese stocks plunged the most since February 2014, with the Topix index headed for a correction amid elevated volume and a surging yen, as Chinese equities led a deepening global rout.A pedestrian walks past an electronic stock board displaying the Shanghai Composite Index, outside a securities firm in Tokyo Photo: Tomohiro Ohsumi/Bloomberg

However, the commodities price rout also claimed a number of mining victims on the FTSE 100 this year. Copper prices and iron ore prices slumped to multi-year lows in early December amid reignited fears about weak demand from the world’s biggest metals consumer, China.

Mining companies worldwide have come under increased pressure to slash capital expenditure and operational costs in the face of an accelerating collapse in commodity prices. Given the FTSE 100’s significant weighting to the mining sector, it was hammered.

• Five reasons mining companies are in a hole

In recent weeks, international mining giant Anglo American announced a restructuring plan. As a result, Anglo surpassed rival Glencore to claim the unwanted accolade of this year’s worst performing stock. Shares have fallen by more than 70pc in 12 months.

Meanwhile, Swiss-based Glencore had an equally tumultuous year, and in just one day, September 28, shares plunged almost 30pc after broker Investec warned the stock could be worthless if commodity prices continued to fall. It was among the first miners to act, and has already cancelled its dividend and taken measures to tackle its debt pile.

Indeed, December was a wildly unpredictable month for the FTSE. As the price of a barrel of Brent crude sank to its lowest level in 11 years, the blue-chip index closed at a three-year low due to the dramatic fall in the oil price, before it rallied briefly after the historic quarter-point US interest rate rise.

Amid a sea of negatives, it was housebuilders that emerged the victors this year. Taylor Wimpey, Barratt Developments and Persimmon were among the top performing stocks in the last 12 months, rising 30pc to 40pc.

Analysts at Hargreaves Lansdown said the stellar performance was due to “record low mortgage rates, a benign land market and favourable government policy.”

The supermarket price war also left its mark on the FTSE 100 this year, as grocery chain Morrisons found itself demoted from to the mid-cap index in the final review of the blue chips constituents this year.

Other companies such as Weir, G4S, and Meggitt were also demoted from the index to make room for Worldpay, Berkeley Group and DCC.

The volatility in Britain’s benchmark index is a trend which analysts predict will continue.

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