FTSE bloodbath as £16.7bn wiped off top firms

LONDON

THE climax of a “bearish” week on the markets saw £16.7 billion wiped off the value of the FTSE 100 yesterday, following several days of volatility.

Just a handful of London’s top-flight shares avoided the bloodbath while European counterparts saw a similar decline. The index closed 64.54 points, or 0.92%, down at 6,939.56.

David Madden, market analyst at CMC Markets UK, said the outlook was “bearish”.

“Stocks are firmly in the red heading into the weekend,” he said. “It has been a brutal week for the markets as the global equity rout has shattered investor confidence. Concerns about higher interest rates in the US, global trade tensions and a potential political fight between Italy and the EU have all played a role in the decline.

“The FTSE 100, Dax 30 and Cac 40 are all trading below their respective 200-week moving averages, and that points to very bearish sentiment.”

The German Dax was down 0.94% and the French Cac fell 1.29%.

Fawad Razaqzada, market analyst at Forex.com, said the markets could rebound next week. He said: “We wouldn’t rule out the possibility of a rebound for stocks next week given the extent of this week’s drop. Clearly, there are some strong companies out there with solid fundamentals that may have fallen below their fair values.

“We think Europe could outperform in the event of a stock market rebound because of the US markets’ outsized rally over the past several years.”

In London, Royal Bank of Scotland posted a rise in thirdquarter profit but suffered a hit to its share price after warning over Brexit. The lender, still 62% owned by the taxpayer, posted a 14% rise in profits to £448 million in the three months to September 30. But RBS also took a £240m impairment charge, including £100m to reflect the “more uncertain economic outlook” in Britain ahead of Brexit.

British Airways owner International Airlines Group (IAG) said profits were hit by higher fuel costs in the third quarter as it continues to grapple with the fallout from a major cyber attack. On a pre-tax basis, profits fell 0.4% to £1.26billion in the three months to September. Shares fell 1.8p to 585.6p.

Sterling was 0.08% up against the US dollar, trading at 1.283. It dipped 0.13% versus the euro to 1.125.

Oil prices were heading for a weekly loss after Saudi Arabia warned of oversupply. Mihir Kapadia, founder of Sun Global Investments, said the impending sanctions on Iran had spurred an expectation of a shortage in the foreseeable future, “but now Saudi Arabia and Opec have raised concerns of oversupply because of rising inventories”.

The biggest risers on the FTSE 100 were Randgold, up 218p to 6,416p; Paddy Power, up 145p to 6,530p; Associated British Foods, up 46p to 2,397p; and CRH, up 33p to 2,170p.

Its biggest fallers were Evraz, down 34p to 503p; Ocado, down 41.2p to 782.4p; BT Group, down 10.95p to 229.6p; while Royal Mail fell 14.9p to 348.7p.

NEW YORK

SHARES of Amazon.com Inc dropped by the most in four years yesterday after its outlook for holiday season sales missed targets, fanning concerns that Wall Street’s tech darlings are finally starting to face stronger competition.

The third-quarter results were the second time running that billionaire Jeff Bezos’ firm had fallen short of sales targets and, allied to a similar disappointment from Google-owner Alphabet, they sent a shockwave through stock markets.

There were no ratings downgrades from the Wall Street analysts who have almost universally backed the companies’ long-term prospects but several said there were signs that both were beginning to face tougher competition from tech peers as well as the retail companies Amazon has bullied in recent years.

The fall of as much as nine per cent in shares knocked more than $80 billion (£62.4 billion) off Amazon’s market value and relegated it behind Microsoft Corp and Apple Inc in terms of market value.

“Google, Microsoft, and Walmart ... are more difficult to kill,” said one analyst.

Shares in Alphabet dropped about 2% after it fell short on sales. US stocks sold off further and the S&P 500 flirted with correction territory .

The Dow Jones fell 296.24 points to 24,688.31, the S&P 500 lost 47 points to 2,658.57 and the Nasdaq Composite dropped 151.12 points to 7,167.21.