Apart from plunging oil prices, investors are fearful China’s economy could face a hard landing – in other words, instead of growing at around 7% as it reportedly is now, growing at low single digits.
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Not surprisingly, mining and energy companies were responsible for most of the damage, as U.S. crude oil prices fell to US$26.30 a barrel – the lowest figure since May 2003.
Oil breaks $28/barrel – trading down to $27.50 – as the world braces for an increase in supply from Iran…Energy names continue to get punished…the IEA ( International Energy Agency) saying that the world could “drown in oversupply” sending oil mkts into a tailspin…
The UK blue-chip index fell 235 points, or 4%, lower at 5,641 as a slump in USA markets at the open sparked a renewed drop on the FTSE 100.
The benchmark FTSE 100 index ended 3.5 percent lower at 5,673.58 points after touching 5,639.88, its lowest level in more than three years. The last time this happened was during the depth of the financial crisis in 2009. Commodities producer and trader Glencore PLC jumped 5.1%, while platinum and iron ore miner Anglo American PLC closed 2.6% higher.
The International Monetary Fund (IMF) said on Tuesday that easing growth in China and rising geopolitical tensions led it to cut global growth forecasts for the next two years.
The FTSE 350 Oil and Gas index was up 1.1 percent, with BP and Royal Dutch Shell both gaining over 1 percent.
Shares were also buoyed by a dovish speech from Bank of England governor Mark Carney suggesting it would be some time before a rise in the United Kingdom interest rate, largely because of the headwinds from the global economy.
Hedge funds have also felt the market pressure recently as Hedge Fund Research data as customers pulled out more money than they invested in the final three months of 2015.
“Ugly; very very ugly, describes current equity markets, with momentum swinging negative yet again and the bears firmly in control”, Rebecca O’Keefe, head of investment at stockbroker Interactive Investor said, as quoted by the Guardian.
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Shares in JD Wetherspoon (LON:JDW) lost their fizz by 49.5p, or 7.3%, to 625p as the pub group revealed higher Christmas sales but said annual profits were likely to be towards the lower end of hopes.
