Stockmarket “bloodbath” warning
The FTSE 100 plummeted nearly 9% on Friday reflecting investors’ frazzled nerves despite the banking bailout and 0.5% interest rate cut.
Share prices of Britan's top 100 companies closed at 3932 points, down 381 points (8.85%). In the early hours of trading, the FTSE crashed by more than 10% to a low of 3,874 points. Although the index experienced a brief rally at noon, rising above the 4,000, once the US stockmarket opened in the US it remained depressed around the 3,900 mark.
Early trading in Wall Street saw shares falling sharply, the Dow Jones dipping below 8,000. President George Bush has vowed to "aggressively" tackle the economic crisis.
The falls come a day after the Tokyo stockmarket experienced its worst one-day slump in over a decade. Wall Street has also seen losses every day this week, while in Europe, Frankfurt’s Dax was at one point down 10.57% and Paris’ Cac fell by 9.73%.
Simon Denham, managing director of Capital Spreads, says the huge stockmarket falls reflect the lack of confidence coming into the close of business every day.
He predicted a "complete bloodbath” during the day.
In the US, one of the biggest losers from stockmarket turmoil is General Motors. Speculation is rife that the company, which this week hit its lowest share value since the 1950s, might be forced into administration and with millions of employees worldwide, the impact on the global economy could be severe.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.