FTSE’s Worst Week For Six Years Posted on September 5th
6:46pm UK, Friday September 05, 2008
The FTSE 100 Index has tumbled 7% this week - its worst plunge for more than six years.
FTSE Index back in bear territory
The declines end a recent two-month revival for the Footsie and come amid deepening fears over the global economy, a falling pound and record slumps in house prices.
Lower commodities prices have also hit the index as oil firms and miners make up around a third of the Footsie, while banks have come under more pressure.
Blue chips slipped by 2.26%, or 121.4 points, on Friday - to end the week at 5240.7.
This week’s plunge brings stocks back into “bear market” territory, more than 20% below last October’s peak.
David Jones, chief market strategist at IG Index, said: “After some relatively calm trading throughout August we have seen a real swing in sentiment this week.”
It is the worst fall since July 2002, when the Footsie followed US markets lower with an 8.5% plunge in the wake of financial scandals such as Enron and WorldCom.
Meanwhile, there was more gloom from the US after worse than expected jobless figures in August sent Wall Street to further losses.
Banks have been under the spotlight amid uncertainty over what will happen when the Bank of England’s Special Liquidity Scheme comes to an end on October 20.
Some analysts speculate that banks have borrowed as much as £200bn under the scheme, which allows them to swap riskier assets for safe Treasury bonds.
A further squeeze on lending could result unless it is extended.
CMC Markets chief dealer Paul Webb said: “The doom and gloom surrounding the global economic outlook could be sufficient to drag the index back towards July 2008 lows.”