New analysis from ETF provider GraniteShares reveals that of the 10 days when the FTSE 100 fell by the most last year, seven of them were in March. However, when looking at the 10 days when the index saw its biggest rises, three of these also occurred that month. On 12th March, the FTSE 100 fell by 10.87%, the biggest fall of the year, and on 24th March it increased by 9.05%, its largest rise of 2020.
Analysis of the S&P 500 last year also reveals that six of the 10 days when it fell by the most were in March, and eight of the days when it saw its biggest rises also occurred then. On the 16th March the index fell by 11.98%, representing its biggest fall of the year, and on 24th March it rose by 9.38%, the biggest rise of any day in 2020.
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Obviously last March was an unusual time, when the onset of the pandemic in Europe spooked markets and led to a massive sell off across the board. Such volatility in unlikely to be replicated this year. However, the coronavirus has already demonstrated how unpredictable it can be, and virus-related news has scope to bring further volatility into the markets mix.
Stock market volatility created more interest in short trading
The huge volatility in the markets last year saw a surge in investors looking to either short stocks or use leverage to multiply gains by going long. GraniteShares offers several 3x short and 3x leveraged ETPs on FTSE 100 and S&P 500 stocks, and in the first quarter of last year $3.3 million was traded in them on the London Stock Exchange, which compares to $228.5 million for the last three months (1st November 2020 – 31st January 2021).
Will Rhind, Founder and CEO at GraniteShares said: “Last year’s stock market crash, referred to by some as the Coronavirus Crash, saw a huge correction that started around 20th February 2020 and ended on 7th April. From then onwards, the markets enjoyed growth but there was still huge volatility, attracting many investors to trade more, with some stocks seeing huge growth but others – especially those in sectors hit hard by the crisis – seeing significant falls.”
GraniteShares said that many traders used its short and leverage single stock ETPs to capitalise on falling share prices or maximise returns on those rising. Since the GraniteShares Tesla 3x long ETP was listed on the London Stock Exchange on 1st July 2020, it has seen its value increase by over 2400%, which would have turned a $41,000 investment into over $1 million.