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Leading shares continued to tumble in London this morning in heavy volume of £2.34bn. However, the extent of early losses, which saw the FTSE100 index down 439 points soon after the opening, was reversed as the morning progressed. But the Footsie was still down 305.51 points at 4,008.29 by lunchtime. The wider based FTSE250 index was roughly handled too, losing 432 points to stand at 6,747.
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"Yesterday’s expiry of the short selling ban in the US certainly saw the financial stocks take a pummelling but overall, it's the fact that despite the huge fire-fighting efforts of central banks worldwide we still haven’t seen any thawing of interbank lending that is going to be causing the most concern now," said Matt Buckland at CMC Markets.
Charles Diebel at Nomura said: "In short, its time for the ’kitchen sink’ – as in throw everything there is at the problem – and in such scale that the shock and awe will break the current cycle of fear. If not, then it is hard to see where all this will end."
John Hardy at Saxo Bank agreed, and called on G7 leaders to act at their upcoming summit. He said: "It's vital that the G7 roll out some serious shock and awe this weekend and stop the pattern of the market simply pushing them to respond in piecemeal, serial fashion. A co-ordinated response is absolutely mandatory."
Banks and financial stocks fell the furthest, FT.Com reports. HBOS, the UK’s biggest mortgage lender, fell 20.5 per cent to 122p. Merger partner Lloyds TSB was 12.6 per cent weaker at 184p.
Barclays confirmed it was considering ways in which it could raise new funds to improve its Tier One capital ratio, an important measure of financial strength. Shares in Barclays lost 15 per cent to 205½p.
Royal Bank of Scotland fell 17 per cent to 79.8p. HSBC, seen as the UK’s best capitalised bank, outperformed losing only 5.2 per cent to 815p. Standard Chartered was 14 per cent lower at £10.00.
Wider financial stocks suffered further steep losses. London Stock Exchange was 19 per cent lower at 540p. Interdealer broker Icap fell 10 per cent to 291½p and Man Group, the world’s biggest listed hedge fund, lost 12.5 per cent to 272.3p.
DAILY TECHNICAL COMMENT
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MARKET DATA
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OVERSEAS MARKETS:
New York's sell-off entered a seventh consecutive session overnight. Traders said a wave of mutual fund redemptions had driven the market to fresh five-year lows as retail investors took scant comfort from unprecedented intervention in financial markets from the authorities around the globe. The S&P 500 closed down 7.6 per cent at 990.92. Its longest losing streak in 12 years has taken the index’s decline since the collapse of Lehman Brothers to more than a quarter. The Dow Jones Industrial Average sank 7.3 per cent – its biggest percentage decline since 1987 – to 8,579.19. Japanese shares fell by 11.4 per cent on Friday – the worst drop for 20 years – leading a rout of Asia-Pacific shares as fears deepened that the world’s economy was heading for recession.
COMMODITIES:
Oil futures fell on worries about falling global demand and paid scant notice of signs that Opec looks set to hold an early meeting to discuss cuts in output. Base metals endured another torrid session, with prices down sharply, again on worries about slowing global demand. Even gold futures lost ground as investors booked profits. Soft commodities were mostly firmer, with soybeans up on expectations of a cut in production forecasts.
| Commodity | Last close |
|---|---|
| Gold London PM | $883.50oz |
| Nov Brent crude | $83.00/barrel |
| LME 3-mth Copper | $5,340.50/tonne |
| Baltic dry index (freight) | 2,503 |
| December carbon | €24.35/unit |
FOREIGN EXCHANGE:
The yen gave back some of its recent gains as speculators regained courage to move back into the carry trade following the latest cut in interest rates. Other currencies were little changed, with the euro and the dollar generally flat ahead of the meeting of G7 ministers. This is regarded as something of a last chance saloon attempt to stamp the authorities' determination to co-ordinate action to calm financial markets.
| £1 EQUALS... |
|---|
| €1.263 |
| $1.724 |
| Sfr1.951 |
| ¥173.50 |
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
