There is an old stock market saying that ‘so goes January, so goes the year,’ so the tentative start to 2022 may have some investors wondering quite what may be coming next, as the FTSE All-Share fell by 0.4% in January.
However, it would be wrong to write off 2022 as bad job just yet. That was the index’s sixth January fall in seven years and the All-Share generated healthy capital returns in 2016, 2017, 2019 and 2021 so perhaps investors are better off focusing on the fundamental issues of profit and cash flow growth, dividend yield and earnings cover and above all valuation rather than quirks of the calendar when it comes to designing their portfolio for the year – and years – ahead.
AJ Bell Investment Director Russ Mould said: ““Statistically, January is only the third best month of the year on average anyway, as it trails February and May.
| FTSE All-Share average capital return since 1964 | |
| January | 1.6% |
| February | 2.8% |
| March | 0.4% |
| April | 1.0% |
| May | 2.5% |
| June | (0.7%) |
| July | (0.1%) |
| August | (0.5%) |
| September | 1.0% |
| October | (0.2%) |
| November | 0.1% |
| December | 0.6% |
Source: Refinitiv data
“There is at least some grain of truth with this particular saying.
“Since 1964, the FTSE All-Share has risen 35 times in January (or 60% of the time), fallen 17 times (29%) and barely moved on the final six occasions.
“And once it does move higher in January then the FTSE 100 had made further gains on 24 of those 35 occasions. A January gain followed by a full-year capital gain has therefore happened 41% of the time in 58 years.
“Equally, 17 January losses have been followed by ten gains across the year and just seven declines, so, again, 2022 is far from a write-off just yet.
| FTSE All Share index since 1964 | Number of occasions |
| Up in January | 35 |
| Up for the year | 24 |
| Down for the year | 11 |
| Down in January | 17 |
| Up for the year | 10 |
| Down for the year | 7 |
| Unchanged in January | 6 |
| Up for the year | 5 |
| Down for the year | 1 |
Source: Refinitiv data
“The FTSE All-Share has also been pretty resilient during the bout of volatility that has characterised global stock markets so far in 2022. Supported by a 1% gain across the heavyweight FTSE 100 constituents, the All-Share’s 0.4% means it has beaten all major markets bar Hong Kong, Brazil and India so far this year.
| Best and worst headline equity indices in January 2022 | ||||
| Capital gain | Capital gain | |||
| Brazil | 7.0% | US (S&P 500) | (5.3%) | |
| Hong Kong | 1.7% | Japan | (6.2%) | |
| UK (FTSE 100) | 1.1% | US (NASDAQ Composite) | (9.0%) | |
| India | (0.0%) | UK (FTSE Aim All-Share) | (10.0%) | |
| UK (FTSE All-Share) | (0.4%) | Russia | (10.1%) | |
Source: Refinitiv data. Capital returns in local currency.
“The All-Share has also comfortably outpointed the headline indices of Switzerland, Germany, Russia, Japan and Brazil over the last 12 months, when it has also easily outpaced America’s NASDAQ Composite.”
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