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FTSE 100 falls following dramatic sell-off across Asia and US | FTSE 100 falls following dramatic sell-off across Asia and US |
(35 minutes later) | |
London’s FTSE 100 slipped on Friday morning after yet another fierce sell-off across US and Asian stocks, fuelled by concerns that global interest rates may rise faster than previously expected. | London’s FTSE 100 slipped on Friday morning after yet another fierce sell-off across US and Asian stocks, fuelled by concerns that global interest rates may rise faster than previously expected. |
In early trading, the UK’s benchmark stock index fell by around 0.5 per cent having already suffered a more than 1 per cent fall on Thursday after the Bank of England held interest rates steady at its regular policy meeting but indicated that they may rise again soon. | In early trading, the UK’s benchmark stock index fell by around 0.5 per cent having already suffered a more than 1 per cent fall on Thursday after the Bank of England held interest rates steady at its regular policy meeting but indicated that they may rise again soon. |
That sent the pound sharply higher, which in turn weighed on equities. A vast proportion of FTSE 100 revenues are generated outside of the UK meaning that a strong pound tends to send the index lower. | That sent the pound sharply higher, which in turn weighed on equities. A vast proportion of FTSE 100 revenues are generated outside of the UK meaning that a strong pound tends to send the index lower. |
Elsewhere, China’s main stock index fell by just over 4 per cent overnight after the US’s Dow Jones Industrial Average declined 4.1 per cent on Thursday and the S&P 500 lost 3.7 per cent. Earlier in the week the Dow was hit by a record 1,175-point loss triggered by better than expected US jobs data last Friday that sent US bond yields higher as it introduced the prospect of higher inflation. | |
Nonetheless, despite the latest bout of selling, strategists and analysts maintained that this was unlikely to foreshadow a fundamental shift in the health of markets. | |
“The good news is that the fundamental outlook for the economy remains unchanged, and positive,” Mark Haefele, of UBS Wealth Management’s global chief investment officer, wrote in a note to clients on Friday morning. | |
He said that there had been “little evidence of contagion from equities to other asset classes, or to the real economy”. | |
“Rates, foreign exchange, and credit markets have all remained relatively calm, in spite of the multiyear high equity volatility,” he added. | |
In Europe, Germany’s DAX and France’s CAC clung onto slim gains. Moves in currency markets were muted too, with the pound broadly higher against a basket of other major currencies. Further afield Japan’s yen, generally considered a safe-haven currency during times of market turmoil, closed in on a four-month high against the dollar. |