FTSE’s 14-month low after global meltdown
THE FTSE 100 sank to a 14-month low yesterday as a global shares sell-off stoked by fears over rising inflation intensified.
About £170billion has now been wiped from the value of Britain’s leading shares after a near-nine per cent fall in the index since it peaked nearly a month ago at 7778.64.
The fall of 78.26 points to 7092.43 mirrored similar one per cent-plus losses across leading European markets, which followed a four per cent slump in America’s Dow Jones.
Central banks on both sides of the Atlantic are set to raise interest rates faster and by more than previously expected, alongside the gradual withdrawal of previous measures to stimulate global growth.
The Bank of England’s warning that rates may have to be hiked more aggressively was borne out by official figures showing UK factories continuing to power ahead at the end of 2017.
The manufacturing sector, which accounts for about 10 per cent of GDP, grew by 1.3 per cent in the three months to December from the previous quarter and by 3.4 per cent from the same period in 2016.
Its growth spurt over eight months in a row is its longest continual positive sequence for nearly three decades. Overall industrial production was up by 0.5 per cent, but the construction industry continued to struggle, falling by 0.7 per cent for its eighth consecutive quarterly decline.
Chris Williamson, chief business economist at IHS Markit, warned that manufacturing may have lost some momentum at the start of 2018.
But he added: “Solid export growth is likely to be sustained in the coming months. These gains have occurred alongside a marked pick up in the eurozone economy, which is the UK’s largest trading partner.
“While the recent appreciation of the pound against the US dollar could represent a challenge to future export growth, history suggests the strength of demand in the major trading partners is likely to play the larger role in determining export trends.”