LONDON MARKETS: FTSE 100 Drops To 1-year Low In Global Stock Smackdown
February 09 2018 - 8:35AM
Dow Jones News
By Sara Sjolin, MarketWatch
U.K. stocks dropped for the eighth time in nine sessions on
Friday, setting the FTSE 100 on track for its worst week in two
years as it tracked a bloodbath on Wall Street in the prior
session.
What are markets doing?
The FTSE 100 index lost 0.8% to 7,112.19, on path for its lowest
close since January last year. For the week, the index was looking
at a 4.4% plunge, which would be its worst since January 2016.
The pound dropped to $1.3821 from $1.3914 late Thursday in New
York.
What is driving the market?
U.K. stocks have slumped this week as part of a wider global
market rout, sparked by sharp losses in the U.S. on Monday, when
the Dow Jones Industrial Average posted its biggest one-day point
drop ever, down 1,175 points. The losses came on mounting fears
that faster-than-expected inflation will lead to more Federal
Reserve hikes this year than currently expected.
After a short respite in the middle of the week, stocks tumbled
again on Thursday in a selloff that saw the Dow lose more than
1,000 points again. That plunge weighed on Asian and European
markets on Friday, which all headed for hefty weekly losses. U.S.
stock futures pointed to a mixed open
(http://www.marketwatch.com/story/us-stock-futures-rise-as-dow-faces-worst-week-since-the-global-financial-crisis-2018-02-09)
on Friday.
Investors in London were also reeling from a more
hawkish-than-expected inflation report from the Bank of England out
on Thursday. The U.K. central bank upgraded its growth outlook and
said it may need to raise interest rates sooner and to a "greater
extent"
(http://www.marketwatch.com/story/boe-signals-swifter-pace-of-rate-hikes-2018-02-08)
than previously forecast, sending the pound to an intraday high of
$1.4066.
Read:A U.K. rate rise in May? Analysts digest hawkish surprise
from BOE
(http://www.marketwatch.com/story/a-uk-rate-rise-in-may-analysts-digest-hawkish-surprise-from-boe-2018-02-08)
The FTSE 100 is highly sensitive to sterling swings as about 75%
of revenues are generated overseas.
What are strategists saying?
"The volatility in equity markets is likely to remain at the
forefront of attention for a while more, as investors try to gauge
whether the correction is over or whether it still has more legs to
run. U.S. equity indices closed below their 100-day moving averages
yesterday, with the S&P 500 now being roughly 10% lower than
its peaks," said Marios Hadjikyriacos, investment analyst at XM, in
a note.
"The lower these indices go, the more attractive they become
from a valuation perspective for investors looking to 'buy the
dip,' a factor that could help to stem the decline," he added.
Which stocks are in focus?
Johnson Matthey PLC (JMAT.LN) lost 3.1% after the chemicals
company's rival Umicore SA (UMI.BT) raised almost a billion euros
to fund further growth.
Direct Line Insurance Group PLC (DLG.LN) rose 2.6% after the
insurer said it expects pretax profit for 2017 to jump on the back
of solid results in its motor and commercial businesses and
lower-than-expected weather claims.
What's new in economics?
U.K. industrial production declined 1.3% in December
(http://www.marketwatch.com/story/uk-industrial-output-hit-by-north-sea-shutdown-2018-02-09),
falling more than expected due to an emergency shutdown of a major
North Sea pipeline.
(END) Dow Jones Newswires
February 09, 2018 08:20 ET (13:20 GMT)
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