Loading ...THE TELEGRAPH=Global stock selloff is ‘more than a dip’ as European markets ‘step off the cliff’ =BAD NEWS IS BAD NEWS= and the dovish signals from CBs SEEN as a sign of weakness rather than a reason to ramp up equities
FTSE 100 correction ‘more than a dip’ as Europe stares into abyss
Global stock selloff is ‘more than a dip’ as European markets ‘step off the cliff’ says Alastair McCaig, market Analyst from spread betting firm IG
Global markets are at their lowest levels for more than a year
By John Ficenec, Denise Roland and James Titcomb, in the City
12:04PM BST 10 Oct 20142
Bad economic data is now being viewed as bad and the dovish signals from central banks are now being taken as a sign of weakness rather than a reason to ramp up equities,” said Mr Sudaria.
The Global stock market selloff accelerated on Friday with the FTSE 100 index falling 91.56 points, or 1.4pc, to 6,340.2, it’s lowest level in a year and 7.81pc below highs of 6,878 on May 14.
Gold, a shelter for investors in times of uncertainty, has surged during the past week by as much as 2.64pc, to $1,222.95 per ounce, as the Federal Reserve minutes hinted at delaying interest rate rises till later next year.
Meanwhile, the CBOE Volatility Index, a measure of investor anxiety known as the Vix or “fear index”, leapt more than 24pc.
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“The FTSE 100 has broken through the support on its recent trading range and US traders have moved from the ‘buy the dip’ and ‘risk on’ commentary we heard earlier in the year, this is becoming more than just a dip,” said Alastair McCaig, market analyst from IG.
“Going into the weekend with so much uncertainty in the air will only further fuel traders compulsion to get out of risky assets and it would take a miracle for the bulls to salvage anything today,” added Jonathan Sudaria, from Capital Spreads.
The Dow Jones Industrial Average slumped by 334.97 points, or 1.97pc, to close at 16,659.25 last night as Wall Street feared the US economy would be dragged down by weakness in Europe and the rest of the world.. The price of Brent crude also collapsed to its lowest level in five years at $89.42 per barrel.
“European markets looks like they are staring over the edge and into the abyss, or may have even stepped off the cliff,” added Mr McCaig as Ebola screening at UK airports and the discovery of new cases raised fears the deadly virus may have spread to the continent.
“European equities have plunged on the open as storm clouds gather over the global economy. Bad economic data is now being viewed as bad and the dovish signals from central banks are now being taken as a sign of weakness rather than a reason to ramp up equities,” said Mr Sudaria.
In Germany the benchmark DAX index collapsed by 196 points, or 2.16pc, to 8809.83, bringing the falls for the week to more than 4pc.
Investors were concerned about the slowdown in the German economy as exports in August reported their biggest fall since January 2009 when the global economy was rocked following the collapse of Lehman Brothers. The CAC 40 index of leading shares in France was also 63.9 points, or 1.5pc lower, at 4,076.27 by midday.
In London it was travel stocks which led the market lower on ebola fears, with TUI Travel down 7.34pc to 330.7p and Carnival the cruise ship operator falling 3.3pc to £21.93. Oil related stocks were also feeling the pain as African oil explorer Tullow Oil fell 5.6pc to 539p, and Weir the Scottish based manufacturer of industrial pumps used in the oil industry, was down 3.2pc to £22.26.