Footsie joins bear market roll-call
By Neil Hume | Sunday, 13 July 2008
FT Syndication Service
LONDON: The UK became Friday the last of the world's leading stock markets to enter bear market territory amid fresh concerns that the credit crisis was entering a new phase and a record high for oil prices.
The FTSE 100 dropped 145.2 points, or 2.7 per cent, to 5,261.6, leaving it almost 22 per cent below October's peak and at a two-and-a-half year low. The fall came as oil prices briefly hit a fresh peak above $147 a barrel and capped a dismal week for global equities.
"The outlook for economic growth and corporate profits over the next few years is not good, and any fundamental improvement will take some time given the need to work through the excesses that have been built up in Western economies over the last 15 years," Graham Secker, equity strategist at Morgan Stanley, said.
This week Halifax reported a further sharp drop in house prices, there were thousands of lay-offs in the construction industry, and the Bank of England kept base rates on hold at 5 per cent, in spite of calls for a cut in the face of a slowing economy.
The FTSE 250, which better reflects the make up of the UK economy, has been a bear market for several months. It has fallen 22 per cent this year and is 32 per cent below last summer's record high.
The market's downward lurch could not have come at a worse time for the banking sector. Barclays and HBOS are both due to close multi-billion pound fund raisings next week.
The investment banks which have underwritten these deals risk being left with millions of unwanted shares.
LONDON: The UK became Friday the last of the world's leading stock markets to enter bear market territory amid fresh concerns that the credit crisis was entering a new phase and a record high for oil prices.
The FTSE 100 dropped 145.2 points, or 2.7 per cent, to 5,261.6, leaving it almost 22 per cent below October's peak and at a two-and-a-half year low. The fall came as oil prices briefly hit a fresh peak above $147 a barrel and capped a dismal week for global equities.
"The outlook for economic growth and corporate profits over the next few years is not good, and any fundamental improvement will take some time given the need to work through the excesses that have been built up in Western economies over the last 15 years," Graham Secker, equity strategist at Morgan Stanley, said.
This week Halifax reported a further sharp drop in house prices, there were thousands of lay-offs in the construction industry, and the Bank of England kept base rates on hold at 5 per cent, in spite of calls for a cut in the face of a slowing economy.
The FTSE 250, which better reflects the make up of the UK economy, has been a bear market for several months. It has fallen 22 per cent this year and is 32 per cent below last summer's record high.
The market's downward lurch could not have come at a worse time for the banking sector. Barclays and HBOS are both due to close multi-billion pound fund raisings next week.
The investment banks which have underwritten these deals risk being left with millions of unwanted shares.