The FTSE 100‘s down 2.5% since the beginning of the year. This means £10,000 invested in an index tracker then would be worth £9,750 now. It’s clearly not a terrific return, however the index has demonstrated appreciable volatility in latest months. Unsurprisingly, numerous this volatility has been created by the brand new US administration.

What’s been occurring?

The FTSE 100 has reached vital highs and lows. The index hit file highs, peaking at 8,908.82 factors on 3 March. This rally was fuelled by enhancing macroeconomic circumstances, together with moderating inflation and expectations of rate of interest cuts from the Financial institution of England.

Sturdy company earnings throughout sectors corresponding to healthcare and fundamental sources additionally improved investor confidence. Moreover, geopolitical developments led to elevated European defence commitments, with governments saying to elevate budgets amid tensions between Russia and Ukraine. This boosted defence shares and contributed to the FTSE 100 reaching new highs.

Nevertheless, the optimism was short-lived. World markets have been rattled by US President Donald Trump’s aggressive tariff insurance policies. In April, Trump imposed sweeping tariffs on imports and escalated a commerce warfare with China and different nations. China retaliated with its personal tariffs, intensifying fears of a worldwide recession.

The FTSE 100 nosedived. Sectors closely uncovered to worldwide commerce, corresponding to banking and mining, suffered vital losses. Whereas a brief rollback of tariffs supplied temporary aid, uncertainty surrounding commerce coverage continues to weigh on market sentiment.

Shopping for the index or particular person shares

The FTSE 100 isn’t large on development, however dividends are usually elevated. And whereas common complete return for the blue-chip index over the long term considerably lags the S&P 500, there’s a broad consensus that UK and European markets have been neglected in recent times. Coupled with US market turmoil, there’s an opportunity markets might outperform on this aspect on the pond.

Nevertheless, my choice is for particular person shares. It may be more durable to constructed a diversified portfolio this manner, however it may be achieved with time. One inventory I’m keeping track of is the index’s most dear firm, AstraZeneca (LSE:AZN).

The inventory plummeted in latest weeks, amid considerations about US tariffs on prescription drugs. I believe the very first thing to notice right here is that putting tariffs on prescription drugs might push up the price of important medicines for US residents. However Trump desires pharma and biotech corporations to put money into US manufacturing. It’s fairly a dangerous gamble.

Because it stands, AstraZeneca generates 42% of its gross sales within the US, however solely producers 22% of its merchandise there. That might be a problem for Trump, however I battle to see how tariffs can efficiently be applied with out inflicting extra harm to the US shopper. What’s extra, reshoring pharma manufacturing would take years.

My hunch is that the tariffs will ultimately be restricted on pharma corporations. And that is what makes AstraZeneca an attention-grabbing prospect at 21 instances ahead earnings. This determine is ready to drop to fifteen instances by 2027, primarily based on present projections. Nevertheless for now, I gained’t add to my AstraZeneca holdings. However I’ll maintain a really shut eye on developments.