City traders reeling as £3trillion wiped off markets around world
SHARES in Britain fell for a sixth day in a row yesterday in a brutal rout that has wiped £3 trillion off the value of stock markets around the world.
On another day of turmoil in financial centres across europe, the US and asia, the FTSE 100 index fell 2.6 per cent or 193.58 points to 7141.40 in London.
The slump – the worst since the Brexit vote – reduced the value of Britain’s blue chip companies by £49.8 billion in a blow to millions of pensioners and savers with money tied up in the stock market.
The FTSE 100 has now lost 8.4 per cent of its value or £167.4 billion since reaching an all-time high of 7792.56 on January 12 – taking it down to levels not seen since april last year.
With fears of rising inflation and higher interest rates mounting, nearly £3 trillion has been wiped off the value of global stock markets in little more than a week.
The latest sell- off in London was triggered by panic on Wall Street on Monday night when the Dow Jones industrial average closed a record 1,175 points down. It fell another 567 points in just 11 minutes of trading when the markets opened yesterday before adding 934 points in the following 24 minutes. It eventually finished the day up more than 500 points as it clawed back some of the losses in a dramatic late rally in the final hours of trading.
as analysts warned of unprecedented levels of volatility, computer programmes were last night blamed for aggravating the situation.
US Treasury Secretary Steven Mnuchin said robot traders were contributing to the chaos around the world as they bought and sold huge volumes of stock in microseconds to make money out of sudden moves. Speaking to Congress yesterday, the former hedge fund manager said algorithmic trading ‘definitely had an impact’ as the market tumbled on Monday night. Veteran City commentator David Buik said he had never seen such volatility in more than half a century working in the financial markets. ‘The volatility is breath-taking,’ said the 73-year- old, who works for broking firm Core Spreads. ‘I’ve never seen such volatility as provided by the Dow Jones in the last 24 hours.’ Investors have been rattled by the prospect of higher interest rates around the world – particularly in the US. higher rates mean higher borrowing costs for governments, companies and households, something that could dent corporate profits and economic growth.
But rising interest rates also offer investors attractive alternatives to the stock market – such as government or corporate bonds. as shares around the world tumbled, only two stocks in the FTSE 100 index –
‘Fasten your seatbelts’
Tesco and easyJet – finished the day in positive territory.
Stefan Koopman, an analyst at Dutch bank rabobank, said: ‘Playtime is officially over. rising volatility painfully reminds some investors that one-way bets don’t exist. The size and speed of moves down could easily snowball. Fasten your seatbelts.’
But others urged investors to hold their nerve.
Chad Morganlander, of Washington Crossing advisors in the US, said: ‘It’s going to be a volatile ride for the next several trading sessions. But I think for long-term investors, it’s a drastic mistake to over-react.’