£34bn wiped off FTSE
More than £34bn was wiped off the value of the UK’s leading companies today as the FTSE 100 Index plunged 2.4% lower.
Stockmarkets around the world were hit by aggressive selling as fears over higher inflation and interest rates spilled out of the United States.
Sentiment in the US was also hit by a weakening dollar and a dip in consumer confidence as triple figure falls on Wall Street were mirrored in London as the Footsie shed 139 points to 5652.
By the time trading closed in London, the Dow Jones Industrial Average was more than 100 points lower.
The losses in London saw the Footsie wipe out all of its 113-point rally in the last session before the Bank Holiday break and left it well below last month’s high of 6132.
David Buik, of Cantor Index, said: “There is a total loss of confidence - plain and simple.”
The sell-off also hit London's mid-cap stocks with the FTSE 250 Index 272.5 points lower at 9235.5 - a long way off its all-time high of more than 10,000 earlier this month.
Only five blue chip stocks made it into positive territory today as most of the market sank following last week’s late rally.
BAA topped the leaderboard with a gain of more than 6% or 52.5p to 873p after it turned down an improved 900p a share offer from a consortium led by Spanish firm Ferrovial which valued the airports owner at £9.73 billion.
But the mood was less positive elsewhere with a string of companies which report their earnings in US dollars on the slide.
The greenback suffered its largest one-day fall against the euro in six weeks after figures showed that US consumer confidence fell to a three-month low in May.
A weak greenback means that the profits of dollar earning companies such as building material firms Hanson and Wolseley and fund manager Amvescap come in lower when compared with those reporting in other currencies.
Jimmy Yates, trader at CMC Markets, said: “London equities opened the week’s trading in negative territory after a lacklustre performance from European markets yesterday but there were no signs of a recovery forthcoming with the Footsie trending lower throughout the session.
“Across the Atlantic the outlook is equally downbeat with Wal-Mart suggesting high energy prices have been holding back sales, whilst speculation that imminent changes at the Treasury will promote a weaker dollar in the long term are also doing little to prop up Wall Street.
“Falling US consumer sentiment may be sufficient to see some funds move in to equities, but so long as cash yields remain attractive, overall it’s difficult to see where the next run of buying support will come from.”
