FTSE 100 Drops, Global Recession Fears Rise
London's stock exchange closed just over 7% down today, mired by underperforming mining stocks. Now the word "recession" is getting used a bit more often.
The European bailout plan was not the magic pill that some people thought it would be.
The weakness in the FTSE was mirrored across Europe, with France's CAC and Germany's Dax both registering steep falls. The poor performance of markets in Europe deepened after US retail sales were fell 1.2p in September. The Dow Jones Industrial Average joined the falls and was down more than 3pc at 8981 in mid afternoon trading.
"After a bumper start to the week, the inevitable reversal for equity markets does seem to be under way but there's certainly no real belief so far that this will mark the end of the rally at least in the short term," said Matt Buckland, trader at CMC Markets.
The euphoria surrounding a £2 trillion worldwide effort to bail out banks vanished as grim reality struck home following a week of rollercoaster boom and bust culminating in huge rises on Monday and Tuesday.
The FTSE 100 .FTSE ended down 314.6 points at 4,079.6, erasing a big chunk of the near 12 percent rebound seen in the previous two sessions after plummeting 21 percent last week, its second worst weekly fall on record.
"It's all or nothing with the FTSE at the moment, with yet another large one-day movement," said Tim Hughes, Head of Sales Trading at IG Index.
"The comedown after the euphoria of the multi-billion pound bail-outs earlier this week seemed inevitable, although a sharp rise in the latest UK unemployment figures hasn't helped matters," he added.