InvestmentsAug 24 2015

FTSE slides 4.5% as market woes deepen

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FTSE slides 4.5% as market woes deepen

Global stocks took a beating on Monday after the Shanghai Composite plummeted 8.5 per cent on what was swiftly labelled “Black Monday”.

Having opened 3 per cent lower on renewed concerns over a slowing China, the FTSE 100 extended losses throughout the day and reached a nadir shortly after the US open, trading down some 6.7 per cent.

Some respite followed as US indices also pared initial losses. By mid-afternoon FTSE was down 4.5 per cent at 5,900, with the S&P 500 down 2.7 per cent.

Earlier, the Shanghai stock market experienced its worst day since February 2007 after investors’ hopes that Beijing would loosen policy to stem recent selling proved unfounded.

Deepening concern over the market slide’s implication for the Chinese economy sparked significant falls in a variety of risk assets.

Japan’s Nikkei closed down 4.6 per cent, Brent crude oil hit a six-year low of $44 a barrel, while the FTSE 100 initially opened 2.9 per cent lower at 5,995.

The UK’s blue chip index has now fallen for ten consecutive days, its worst losing streak in over a decade. There were no risers on the index on Monday morning, with miners BHP Billiton, Glencore and Anglo American again among the largest fallers.

The International Biotechnology Trust was the largest faller on the FTSE All Share, dropping 10.3 per cent as investors’ risk appetite dwindled.

Tech and biotech stocks also suffered in the US, with the Nasdaq Biotechnology index entering a bear market and large caps such as Apple and Facebook also experiencing heavy losses.

In Europe, the Cac 40 opened the day down 3.5 per cent, while Frankfurt’s Dax dropped 3.1 per cent, falling below the 10,000 point mark for the first time since January.

Both indices extended these losses in early afternoon trading as US markets opened.

In FX, emerging market currencies continued to weaken, but the euro jumped 2 per cent to $1.17 as expectations for a US rate hike in September faded.