FTSE 100 sinks amid market ‘turmoil’ following overnight rout of Japan’s Nikkei
Investors were spooked by disappointing American jobs data last week, sparking fears of a potential US recession.
The FTSE 100 has plunged after an expected global stock market rout started overnight, with Japan’s Nikkei 225 index suffering its worst day since 1987.
London’s blue-chip index suffered its sharpest fall since July last year on Monday.
It was down 166.48 points, or 2.04%, to end the day at 8,008.23.
It comes after US jobs data sparked a global stock market sell-off at the end of last week, after investors were spooked at the prospect of a potential American recession.
Analysts said on Friday that they feared the US Federal Reserve may have made a mistake by not cutting interest rates, and might now be too late to hold off a recession.
The Nikkei 225 lost 13% on Monday to hit a seven-month low, in a day of trading that was worse than at any time during the 2008 global financial crisis.
The Japanese benchmark index fell 4,451 points to 31,458 on Monday.
Chris Beauchamp, chief market analyst at online trading platform IG, said: “Markets are in absolute turmoil this morning thanks to the Nikkei 225’s biggest one-day drop since 1987, which has wiped out the index’s gains for the year.”
He said that the FTSE and European stocks were likely to suffer a bad day, while “it is on Wall Street where a fresh wave of selling is on the cards”.
“Investors continue to flee tech stocks, and the Nasdaq 100 is expected to open down 1000 points lower from Friday’s close, a loss of over 5%.”
“This is a perfect demonstration of what happens when everyone tries to sell at once. Such moves don’t stop in a single day and we likely have a summer of volatility ahead of us, particularly as we await developments in the Middle East.”
The mid-cap FTSE 250 fell by 2.8% at the end of trading. France’s CAC 40 lost 1.4%, while Germany’s Dax dropped 1.9%.
Oil prices have also slipped. Brent crude prices were down 1% to 76.04 US dollars on Monday morning, its lowest point this year.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “The FTSE 100 has opened down as the US sneeze risks becoming a cold.
“Exporters bore the brunt of the sell-off as contagion from last week’s poor employment and manufacturing data in the States put recessionary fears back on the table.
“The discussion around September’s rate decision at the Federal Reserve Bank has moved from if to how much, with the odds now moving in favour of a half point cut.”
