- Markets at lowest level since December 20th
- EM currency weakness hits risk appetite
- Aberdeen sinks sharply on EM worries after broker downgrade
techMARK 2,789.84 -1.34%
FTSE 100 6,663.74 -1.62%
FTSE 250 15,703.44 -1.73%
The FTSE 100 suffered triple-digit falls on Friday, dropping to levels not seen in over a month as volatile conditions in emerging markets spread fear amongst investors across the globe.
UK markets were pushed even further lower in afternoon trade after another sell-off on Wall Street as the Dow Jones Industrial Average sank as much as 200 points with analysts labelling it as the beginning of a so-called correction.
Back in London, the FTSE 100 closed 109.54 points down at 6,663.74, a fall of 1.6% on the day. The last time the index closed lower was on December 20th 2013.
Emerging markets in focus
Weakness in emerging-market currency markets - the Argentinian peso, Turkish lira, Russian ruble, Ukrainian hryvnia, South African rand and Brazilian real - was prompting investors to shy away from riskier assets and move towards safer investments during today's session.
As such, gold prices rose as much as 0.8% to a two-month high of $1,273.20 an ounce today; US Treasuries and UK Gilts also advanced, with yields on benchmark 10-year bonds for both falling sharply.
"European markets fell flat on their faces as the emerging market currency rout continued [...] as economic growth concerns start to spread out beyond China," said Michael Hewson, Chief Market Analyst at CMC Markets.
Markets are still reacting to data yesterday which revealed a surprise contraction in China's manufacturing sector this month, along with a poor batch of economic figures from the US on manufacturing and existing-home sales.
Concerns over the effects of the Federal Reserve's tapering plans are also still having an impact on developing markets, with speculation ramping up ahead of the next policy meeting at the end of the month. Investors are waiting to see whether policymakers will continue to reduce asset purchases by $10bn a month after last month's decision to cut them from $85bn to $75bn.
Acting as a backdrop, the future of Mark Carney's forward guidance plan - which links monetary policy to the unemployment rate - was up in the air after comments from the Bank of England (BoE) Governor at the World Economic Forum in Davos. He said that there was no immediate need for a rise in rates, but forward guidance would need to "evolve" given the recent drop in unemployment in the UK along with other improving data.
Aberdeen, Lloyds, easyJet, Whitbread hit by downgrades
Fund manager Aberdeen fell sharply after receiving a ratings downgrade by Morgan Stanley to 'underweight'. The bank said that a deteriorating fund performance compounds challenging emerging-market fundamentals, "increasing the risk of negative revisions and further multiple de-rating at Aberdeen".
Investec has cut its rating for Lloyds Banking Group from 'buy' to 'hold', saying that expectations for 2013 are still "slightly frothy", causing the stock to slip this morning.
Budget airline easyJet continued to fall after its first-quarter update yesterday in which it said that losses in the first half would be worse than last year. HSBC lowered its rating on the company today to 'underweight'.
Cafe, restaurant and hotel owner Whitbread was also down after Citigroup cut the stock to 'neutral', citing limited upside after a strong rally over recent months.
Fresnillo and Randgold were among a handful of blue chips to finish in positive territory, benefitting from a rise in gold and silver prices.
Royal Mail was unwanted after underwhelming with a 2% rise in like-for-like revenue for the nine months ended December 29th.
Cairn Energy, the oil and gas group, fell after informing investors that it was contacted by the Income Tax Department of India to discuss income tax assessments for the year ending March 31st 2007.
FTSE 100 - Risers
RSA Insurance Group (RSA) 101.70p +1.95%
Fresnillo (FRES) 792.00p +1.54%
Randgold Resources Ltd. (RRS) 4,233.00p +1.07%
Sainsbury (J) (SBRY) 362.10p +0.92%
ARM Holdings (ARM) 978.00p +0.51%
Admiral Group (ADM) 1,427.00p +0.49%
Morrison (Wm) Supermarkets (MRW) 245.10p +0.37%
Centrica (CNA) 321.80p +0.34%
Land Securities Group (LAND) 1,050.00p +0.29%
Sports Direct International (SPD) 708.00p +0.28%
FTSE 100 - Fallers
Aberdeen Asset Management (ADN) 397.30p -5.72%
International Consolidated Airlines Group SA (CDI) (IAG) 406.30p -4.94%
Experian (EXPN) 1,072.00p -4.63%
Mondi (MNDI) 936.00p -4.39%
Prudential (PRU) 1,262.00p -3.66%
Ashtead Group (AHT) 770.00p -3.63%
Persimmon (PSN) 1,264.00p -3.51%
Tullow Oil (TLW) 860.00p -3.42%
Coca-Cola HBC AG (CDI) (CCH) 1,696.00p -3.20%
BG Group (BG.) 1,255.00p -3.09%
FTSE 250 - Risers
Petra Diamonds Ltd.(DI) (PDL) 135.00p +2.27%
Devro (DVO) 311.70p +2.20%
Polymetal International (POLY) 596.00p +1.71%
Betfair Group (BET) 987.00p +1.60%
Serco Group (SRP) 509.00p +1.29%
Ladbrokes (LAD) 152.60p +1.26%
Britvic (BVIC) 699.50p +0.94%
BH Macro Ltd. EUR Shares (BHME) € 19.49 +0.93%
Hiscox Ltd (HSX) 640.50p +0.71%
Galliford Try (GFRD) 1,178.00p +0.60%
FTSE 250 - Fallers
Bank of Georgia Holdings (BGEO) 2,214.00p -6.03%
Cairn Energy (CNE) 247.50p -5.57%
Enterprise Inns (ETI) 153.70p -5.47%
Ashmore Group (ASHM) 325.80p -5.29%
Tullett Prebon (TLPR) 343.60p -4.98%
Inchcape (INCH) 603.00p -4.96%
Fenner (FENR) 417.20p -4.86%
Halfords Group (HFD) 448.10p -4.82%
Smith (DS) (SMDS) 324.00p -4.79%
Ophir Energy (OPHR) 280.00p -4.76%