London’s leading FTSE 100 share index slid sharply to a six-month low today as spooked investors around the world sold off shares.
The coincidence of a number of major troubles around the world is driving investors to get out of risky assets, and the blue-chip index closed down 1.2 per cent at 6,955 – a mark it has not seen since March – but had been as low as 6,928 at one point.
A potential economic crisis in Europe stemming from the clash between the Italian government and the EU over Italy’s public spending plans is one key driver, with the EU today rejecting Italy’s latest proposal.
The German stock market was showing a hefty 1.9 per cent drop, and Paris 1.4 per cent.
The FTSE 100 index slid sharply to six-month lows today as investors were spooked by a number of different troubles around the world.
Potential economic fallout generated by the alleged murder of journalist Jamal Khashoggi by Saudi authorities is another big concern.
These two developments add to the long-running concerns over the possible escalation of a trade war between Donald Trump’s America, China and others.
The little brother of the FTSE 100, the FTSE 250 index was even further adrift, falling more than 2 per cent to 18,359 as of late afternoon.
The pound was relatively unmoved however, up 0.1 per cent today to $1.298.
‘Certainly, there is a generally risk-off tone in the markets and a lot going on – lots of uncertainty on several fronts,’ noted Neil Wilson, chief market analyst at Markets.com.
‘Geopolitical concerns around Saudi Arabia maybe matter, while we are still dealing with the aftermath of the bond shake out that sparked the initial selloff this month.’
‘Italy is also weighing on European equities which are at 2-yr lows. The Dax is off 2.5 per cent and the FTSE 100 down around 1.5 per cent.
‘A horrible day for European equities and the weakness following through from the US has not helped with indices close to their lows of the day in afternoon trading,’ he added.
London was far from alone in seeing a slide in shares, with stock markets across Europe in the red.
‘The Eurozone found no way to staunch its bleeding as Tuesday went on; in fact, with the European Commission confirming it was rejecting Italy’s budget – giving the country 3 weeks for a rewrite – the region’s wounds only deepened, said Connor Campbell, an analyst at Spreadex.
A potential economic crisis in Europe stemming from the clash between the Italian government and the EU is one key driver of today’s sell-off.
‘While the FTSE MIB shed 1 per cent, it was its peers that suffered the most, with the CAC and DAX down 1.9 per cent and 2.4 per cent respectively. That sharp drop left the German index the wrong side of 11250, a level not seen in just shy of 2 years.’
David Madden, market analyst at CMC Markets UK also chimed in: ‘Continued uncertainty over Italy along with geopolitical tensions have sent stocks tumbling.’
‘The EU Commission have rejected Italy’s budget proposal, and the administration in Rome will be required to resubmit their proposal in a number of weeks. Italy’s Prime Minister, Giuseppe Conte already stated there is no ‘plan B’.’
‘This has worried investors as they are afraid it could spark another round of the eurozone debt crisis. The US-China trade dispute rumbles on, and that is also playing into the sour sentiment, Madden added.