City panic-selling wipes £50bn from top British shares
MORE than £50billion was wiped off the value of Britain’s biggest companies yesterday after panicky early trading in global markets.
The FTSE-100 index plummeted more than 250 points to 7079.41 – its lowest level since late 2016 – within minutes of the London Stock Market opening at 8am.
The sell-off followed the record-breaking 1175.21 slump in the Dow Jones Industrial Average on Wall Street, which reverberated across the financial world.
The UK FTSE rallied mid-morning, climbing to 7189.64 – down 145.34 points or 1.98 per cent.
But by the close of play at 4.30pm values had spiralled downwards again to 7141.40, a 193.58 or 2.64 per cent fall.
Spooked
It slashed £50billion from the value of blue-chip shares as the market fell prey to a “global stock sell-off” sparked by fears that rising inflation could force central banks to hike interest rates.
The decline, the lowest close since April 2017, was mirrored by the German Dax and French Cac 40, which each dropped 2.3 per cent.
It adds to the deep losses during Monday’s session when more than £27billion was wiped off values before an overnight rush to sell in Asia and on Wall Street, where the Dow Jones Industrial Average and the S&P 500 dropped 4.6 per cent and 4.1 per cent respectively.
Tokyo’s Nikkei 225 Day was down 4.7 per cent, while Hong Kong’s Hang Seng Index plunged five per cent lower.
US stocks continued their descent after markets opened on Tuesday mornin, but were up 56 points as the UK market closed.
The global equity sell-off has been building since last Friday when traders became spooked by the prospect of tighter monetary policy after the US posted strong average earnings data.
Connor Campbell, financial analyst at Spreadex, said: “The only hope for the markets at the moment is that investors suddenly decide the sell-off has been a bit overdone. Though in a way it is fitting, matching the astonishing, record-breaking recent rise of global indices with an equally astounding, heart-stopping drop.”
Analysts called the market jitters “a correction, not a crash”.
Jacob Deppe, head of trading at online trading platform Infinox, said: “The fall in global equity markets is no more dramatic than the record rises we have seen since the end of November.
“The party may be over for now but this could be more of a sobering correction than a rout.”
Some analysts said the market had been “riding for a fall” after a run of record gains over the past year.
THE UK economy will withstand stock market shockwaves which yesterday wiped nearly £50billion from the country’s top 100 companies, economists predicted.
Investors took flight from riskier shares for safe-haven government bonds, accelerating the sell-off from Monday’s £27billion losses for the FTSE 100, as concerns intensified over more and faster hikes in US interest rates to curb inflation.
The 2 per cent fall in leading UK share prices mirrored similar losses across leading European markets after heavy reverses in Japan and Hong Kong, which followed the biggest single-day points decline, 1,175.21, in America; s Dow Jones index. Andrew Kenningham, chief global economist at Capital Economics, admitted the global share prices fall had been “unusually sudden” but was not yet “exceptionally large”.
He argued household spending had proved “particularly resilient” in the face of previous falls that had not come from weaker economic growth.
Samuel Tombs, of Pantheon Marcoeconomics, said: “We see little reason to revise down our forecasts for the UK economy in response to the tailspin in equity markets. The recessions in the early 1990s and 2000s were driven much more by declines in bank lending than investors’ responses to falling equity prices. Most households won’t reduce their spending and are far less actively involved in the equity market than in the past.”