£64bn wiped off FTSE 100 as global markets slump
Around £ 64 billion was wiped off the value of the largest companies in Britain and renewed fears of the global economy slipping around the world.
During the exciting and dramatic day of negotiations in London, the FTSE 100 fell 246 points, or 4.67%, to close 5041. This is not the worst place on a daily decline in percentage terms since March 2009 and a sharp drop in points occurred in November 2008 in the wake of the collapse of Lehman Brothers.
Markets in Europe shared the dark day with Germany as German Dax lost 4.9% and France’s CAC fell 5.2%. Wall Street was also bathed in red, with the Dow Jones down 444 points, or 3.99% in early afternoon in New York.
The course was the start of trading, triggered by the U.S. Federal Reserve, warning that there was a “significant risk” for the U.S. economy. Financial markets are still suffering from the bad economic news from around the world on Thursday, but disappointing production data from China and alarming evidence that the private sector to fall, dragged the region into recession.
Giles Watts, director of Capital City Index, said that the cellophane has been driven by “mass demonstration of a sharp slowdown in the world”, making a recession more likely.
“All the negative news only resulted in a scenario where investors are wondering whether they really should be putting their money in stocks or risky defensive shelters.
A call from Christine Lagarde, director of global leaders to combine the IMF to restore confidence in the city.
Each title has suffered a decline in the FTSE 100, with mining companies such as Vedanta, Antofagasta and Kazakhmys all suffering double digit falls. Bank shares were also in retreat across Europe, amid calls for financial firms to strengthen their balance sheets with fresh capital to cope with the impending loss of the debt crisis in the euro area.
“Gloomy outlook last night by market sentiment from the Federal Reserve has seen the right of the first shots, while the disappointing figures from China’s PMI has done little to lighten the mood, especially in resources,” said Ben Critchley IG Index.
Louise Cooper, an analyst at BGC Partners market, said traders were very fearful of the global economic outlook. Investors are speaking of volatility in the markets becoming the “new normal. The future is so uncertain – the world could look significantly different in a month’s time. Greece could have defaulted, we could be in the middle of a banking crisis – a bank could have even gone bust.”
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