FTSE tumbles amid global sell-off
Fears over US consumers’ appetite to spend sparked a global sell-off today that sent the FTSE 100 Index tumbling 1.5%.
The London market followed other world indices into the red as investors also took profits from a recent strong rally.
News that Japan became the latest country to shake-off recession failed to prevent the shares plunge and the Footsie closed down 68.9 points at 4645.
The fall followed drops of up to 6% on Asian markets overnight in the wake of Friday’s disappointing US consumer report.
Wall Street failed to buck the trend and the Dow Jones Industrial Average plummeted 1.9% in early trade as investors rushed to take profits following a recent strong run.
Falls were also seen on European indices, with France’s CAC 40 and Germany’s DAX down 2.4% and 1.9% respectively.
There was little corporate news to divert attention away from last week’s US consumer report, which showed weaker than expected confidence in early August.
Investors were fretting about the pace of economic recovery in the US, with last week’s data showing a shock fall in America’s retail sales adding to the worries.
Investors brushed aside the data on Japan’s economy, which grew 3.7% at an annual pace in the second quarter.
While Japan has now joined France and Germany in exiting recession, a slow recovery for the US has far reaching implications.
Commodity stocks fell as markets anticipated further pressure on demand, while oil prices also plunged below 66 dollars a barrel as a result. Prices have fallen about 7% in two days.
Miners weighed on the London market with Anglo American the biggest faller, down 107p at 1820.5p, followed by Xstrata which lost 43p at 742p.
Banks were also among the losers following a report by KPMG that UK institutions are considering setting up special purpose vehicles to take losses related to commercial real estate off their balance sheets. Lloyds Banking Group fell 4.5p to 95p, while Barclays slipped 12.05p to 347.05p.
There were only a handful of stocks on the Footsie risers board, led by pharmaceuticals firm Shire with a gain of 22p to 1019p thanks to a broker upgrade.
Property firms were also pulling the London market lower as last week’s excitement over a possible £10bn (€11.6bn) bid for British Land started to fade.
British Land lost 16.3p to 496.2p, while Liberty International dropped 15.3p to 472.4p and Hammerson shed 13.2p to 390.9p.
Weekend speculation regarding a possible £500m (€580m) rights issue by Barratt Developments caused its shares to decline 13.7p to 226.4p, a fall of almost 6% to leave Barratt near the top of the FTSE 250 Index fallers board.
The biggest Footsie risers were Shire up 22p to 1019p, Legal & General up 1.3p at 67.2p, Aviva up 6p at 377.8p and GlaxoSmithKline up 9.5p at 1167.5p.
The biggest Footsie fallers were Anglo American down 107p at 1820.5p, Xstrata down 43p at 742p, London Stock Exchange off 37p at 731.5p and Rio Tinto down 110.5p at 2245.5p.
