The FTSE 100 has shed 1.6 per cent in early trading after US stocks’ relief rally proved shortlived overnight.
The UK’s blue chip index opened down 98 points at 5,983 as the sharp volatility seen so far this week continued. The index had moved 3.1 per cent higher yesterday, following on from a 4.7 per cent fall on Monday which marked its tenth consecutive day in the red.
Sentiment was hit on Wednesday by the sudden reversal seen for US equity markets overnight.
Having traded 2 per cent higher at the open on Tuesday, buoyed by Chinese’s decision to ease monetary policy, the S&P 500 faded in the afternoon and closed down 1.4 per cent.
Some US sectors proved more resilient: biotechnology indices and major tech stocks such as Amazon, which had been hit hard on Monday, were able to remain in the black yesterday.
But the wider US index move suggests the FTSE’s own rebound may have been overdone.
Yesterday’s bounce in developed market stocks came in spite of a 7.5 per cent fall for China’s Shanghai Composite on Tuesday, and Chinese stocks continued to struggle in today’s trading.
In its first session since China’s central bank cut rates yesterday, the onshore market closed in the red once again - albeit by a mere 1.3 per cent - to take its loss over the past three days to more than 16 per cent.
There was better news in Japan, however, where the Nikkei posted its largest one-day gain since November. The index ended the day 3.2 per cent higher, following on from falls of over 4 per cent on both Monday and Tuesday.
