MARKET REPORT
THE boost to stocks and shares around the world earlier in the week was short lived by yesterday, as traders dived for cover and the talk of recession increased.
Weak economic figures from Germany and China, with the former seemingly heading for a recession after revealing a 0.1% contraction in the second quarter of the year, spooked the FTSE 100.
The index closed the day down 103.02 points, a fall of 1.42%, to 7,147.88.
The German Dax and French Cac fared worse, closing down 2.19% and 2.08% respectively.
Tensions in the market were also raised as the US and UK both saw inverted yield curves, where shortterm government bonds pay out more than longer term ones, which the City tends to see as a sign of troubles to come.
Connor Campbell, financial analyst at SpreadEx, said: “If the warning signs of second quarter contractions in the UK and Germany weren’t enough, this inversion, which last appeared as a harbinger of the financial crisis, caused investors to seriously chew over the idea that a recession is approaching. Predictably, this translated to some rather nasty losses.”
Add to that the ongoing China-US trade tensions, Hong Kong unrest and Brexit, and most traders struggled to find much to be positive about.
The smallest ray of sunshine was the 0.29% increase in the pound versus the euro, with £1 worth 1.0826 euros.
The pound was flat against the dollar at 1.2061.
Analysts put the boost down to the better-thanexpected UK inflation figures released yesterday morning.
Even the oil markets struggled, following new data in the US that inventories of oil were about 3% above the fiveyear average for this time of year, according to the Energy Information Administration.
Brent Crude fell 4.24% to 58.70 dollars a barrel.
In company news, insurance giant Prudential confirmed it will spin off its UK and European arm by the end of the year as it posted a hike in half-year profits.
Investors were impressed, despite the ongoing tensions in Hong Kong where Pru has a large presence, with shares closing up 61.5p at 1,434.
Sports Direct has announced that auditor Grant Thornton is set to quit its role working for the retail giant and could have a new one appointed by Government after the Big Four appeared to rule themselves out of working for Mike Ashley’s business. Shares dropped 23.8p to 214p.