FTSE in-depth: Recovery fears spook investors
Fund managers chose the 80th anniversary of the great Wall Street crash to exit stage left.
Geoff Foster: Downgraded US growth forsecasts hurt shares.
Growing doubts about the pace of the global economic recovery following the unexpected fall in US consumer confidence in October prompted hefty falls overnight in far-eastern markets and contributed to early weakness in London.
Matters were made worse by dealers at home having to complete the rump of a large programme trade started on Tuesday, which saw institutions switch out of many mid-caps into defensive blue chips. The FTSE 250 bore the brunt of the selling and closed a hefty 291.78 points, or 3%, lower at 8,849.50.
Goldman Sachs later rubbed salt into the market's gaping wound by slashing its growth forecast for third-quarter US gross domestic product to 2.7% from 3%. That put the wind up Wall Street which opened 40 points lower, dragging the Footsie down 120.55 points to 5,080.42.
Domestic GDP figures last Friday showed the UK economy disappointingly still in recession and should the world's leading economy show any signs of stalling, hungry bears could have a field day.
Following the spectacular 50% rally from March lows, many dealers had been expecting a 'healthy' market correction.
So what better time for market-makers to 'shake the tree' and hope that a few nervous investors fall out, than October half-term week. Many of the City's heavy hitters are away with the family, leaving juniors in charge to take all the flak.
Lower metal prices on fears of reduced demand left miners in the dog-house. Xstrata led the retreat at 963.21p, down 91½p, while Kazakhmys fell 111p to 1189.6p. Eurasian Natural Resources dropped 55p to 871.46p and BHP Billiton 108p to 1760.1p. Rio Tinto shed 197½p to 2831.6p after increasing its stake in Canada's Ivanhoe Mines to 19.7% from 9.9%.
Hedge fund giant Man Group slumped 30.3p to 308.97p after its flagship AHL Diversified Futures fund late on Tuesday reported its net asset value had fallen by almost 3% last week.
Broker Killik told clients it would take advantage of the weakness and buy ahead of the group's interims on November 5. There is a strong chance the dividend will be maintained at 44 cents giving a yield of 8.6%.
As defensive stocks came into their own, drinks giant Diageo fizzed 10½p higher to 959.88p and utility National Grid added 5p at 600.33p.
BT eased 0.10p to 133½p but Barclays Capital is bullish. It sees clear upside potential at the telecoms giant due to aggressive cost cutting and regulatory rulings, which should raise hopes of rising dividend prospects. Its price target is 169p.
For the third consecutive day, sellers were all over Yell like a rash. The struggling directories group plummeted 6.16p, or 11.7%, to 46½p after again failing to persuade enough creditors to back a refinancing of its £3.8bn debts.
Yell is this morning expected to issue creditors with an ultimatum - get behind the plan by tomorrow or else face a legal battle.
Department store group Debenhams, 4.85p off at 79.4p, succumbed to profit-taking. Analysts believe Tuesday's sale by TPG, the US buy-out group, of its 9.34% stake to an unnamed hedge fund, could easily be the precursor to a full-scale cash bid north of 100p a share.
Investment manager Rathbone Brothers rose 15½p to 930½p on further consideration of its £35.4m purchase of Bank of Scotland's portfolio management services. The sale involves the transfer of around 6,000 customers-with a total of £1.27bn of funds under management.
Vague bid rumours excited Rank, the UK's second largest casinos group. The shares touched 90½p and closed 1.95p better at 89.55p on revived chatter that 28% far eastern shareholder Guoco Group is at last lining up a cash bid. Guoco is controlled by Malaysian billionaire Quek Leng Chan's investment holding company Hong Leong Berhad.
Energy services group Cape dipped 10p to 250¼p but should rally today. Chief executive Martin May yesterday acquired 10,000 shares at 250p lifting his shareholding to 585,000 shares.
Northern Petroleum cheapened 2¼p to 158¼p after touching 167p at the outset on news that edge fund guru High Sloane had increased his personal shareholding in the company above 3%.
On hearing that Henderson Global now holds 6.05% of the equity, Verona Pharma added 1p at 16½p.
Most watched Money videos
- Iconic Dodge Charger goes electric as company unveils its Daytona
- Mercedes has finally unveiled its new electric G-Class
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Land Rover unveil newest all-electric Range Rover SUV
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- How to invest for income and growth: SAINTS' James Dow
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- Paul McCartney's psychedelic Wings 1972 double-decker tour bus
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- MPs set to grill FCA boss Nikhil Rathi on 'name and...
- Manual cars may be near extinction in five years as the...
- I'm jealous of my husband's dead ex-wife - she was rich...
- Bailey must lead the way on interest rate cuts, says ALEX...
- House prices to jump 2.5% as economy brightens and...
- Attacks in the Red Sea are escalating, warns shipping...
- Investors are pulling money out of UK funds on a worrying...
- Billionaire Czech Sphinx bidding for Royal Mail 'would...
- Greg Clark urges officials to roll out red carpet to...
- London's Alternative Investment Market sees liquidity...
- Britain 'must lay out red carpet' to retain top tech firms
- CITY WHISPERS: Are Darktrace's big shareholders prepared...
- Water firms drowning in sea of debt as borrowing 'bigger...
- Baroness Bowles: Nationwide using sneaky tactics to avoid...
- Older workers will sustain growth, says HAMISH MCRAE: We...
- Savers withdraw £5bn from current accounts in bid for...
- Secrets of the new King Charles bank notes that took ten...
- Disney set to report jump in profits just weeks after...