FTSE 100 suffers worst one day decline in 12 months
It has been a terrible day for traders around the world, with every major market falling. The 2.10 percent that the FTSE fell by was the index’s biggest one day decline in 12 months and it was by no means alone. The German Dax and French CAC both matched the FTSE with declines of 2.1 percent while the Spanish IBEX and Italian FTSE MIB declined by 1.4 percent and 3 percent respectively.
The markets were dragged down speculation that the monetary easing currently taking place in the US could dry up over the course of the next few months, in addition to China snapping a 7 month run of positive manufacturing reports.
Federal Reserve chairman Ben Bernanke implied late last night that the current bond purchasing would not continue if strong signs of economic growth were evident in the US. While he tried to clarify his statement later on, investor confidence was most certainly shook. This was compounded once the Asian markets opened and news of a national decline of factory production in China began to circulate. Even the recently seemingly untouchable Nikkei 225 declined by 7.3 percent, which then had a ripple effect across the globe as the markets opened.
The FTSE 100 itself opened 120 points down, losing 1.6 percent before most of the nation had even arrived at work. This trend continued throughout the day, with every constituent of the index being in the red at one point or another. In fact, at the close of play only 5 of the constituents had made an advance.
British Sky Broadcasting lead the index throughout the day but was pipped at the post by Tate & Lyle PLC, adding 12.50, or 1.6 percent, after it ended talks with the BBC over transmissions fees. Investors were quick to jump on the broadcaster as it was one of the few positive stories to in the market, potentially overvaluing the stock.
Tate and Lyle PLC advanced 1.63 percent with J Sainsbury PLC who advanced by 0.8 percent, adding to yesterday’s impressive gains. The fact that Centrica PLC was one of the index’s top 10 performers with a decline of 0.33 percent says more about the mood on the floor in London today than we ever could.
The biggest losers of the day were without question the miners, who have had a torrid time of late. The manufacturing decline in China lead investors to question future demand for the natural resources associated with factory products.
Anglo American PLC, Antofagasta PLC and Rio Tinto PLC were the three biggest mining casualties with losses of 5.05 percent, 4.39 percent and 4.26 percent respectively. Weir Group PLC, who manufacture mining equipment, also made the list of 10 worst performers on the FTSE with a decline of 3.49 percent.