FTSE and pound take brutal hammering amid fears over global growth and Delta variant

LONDON Stock Exchange shares and the value of the pound have plummeted amid increasing fears global growth is dragging, the Delta variant of Covid is spreading again and central banks could pull monetary stimulus sooner than predicted.

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The FTSE 100, the share index of the 100 companies listed on the London Stock Exchange with the highest market capitalisation, was down 1.52 percent or 109.32 points to 7,068.30 at 4.25pm. This is a slight improvement in fortunes compared to earlier today, when the FTSE 100 slumped by up to two percent, wiping an eye-watering £50billion off its value. These dramatic market falls have seen the FTSE 100 index sinking to a near three-week low, only just above its key 7,000 level.

Losses from miners’ and energy giants’ losses over weaker commodity prices have played a big part in dragging the UK’s leading share index down.

James Smith, an economist at ING, said: “A theme that has developed across markets is that the spread of the Delta variant is a larger economic issue, compared to what investors were pricing in, which is weighing on economy-sensitive sectors like commodities.”

The FTSE 250, the capitalisation-weighted index consisting of the 101st to the 350th largest companies listed on the London Stock Exchange, has only fared marginally better, down 0.87 percent or 207.11 points to 23,629.26.

London-based miner Anglo-American saw its shares plummet by over 10 percent to 2,910.00p just after 3pm, while earlier in the day the share price for Antofagasta slumped by over five percent.

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The FTSE 100 and pound took a hammering in a difficult day (Image: GETTY)

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The FTSE 100 has experienced a difficult day as shares slipped (Image: GETTY)

Share indexes throughout Europe have also taken a hit, with the Cac-40 in Paris down 2.7 percent and Frankfurt’s DAX slipping by 1.8 percent.

Oil prices have plummeted to a three-month low after dropping for the sixth successive session and significantly, Brent crude oil is down 2.8 percent at around $65.96 a barrel.

Richard Hunter, head of markets at Interactive Investor, said: “In the UK, the market is not immune from the growing level of global considerations and has also been under some pressure amid lighter summer trading volumes, which tend to exacerbate share price movements.

“In addition, the FTSE 100 is being additionally hampered by the general weakness in commodity prices and a clutch of stocks being marked ex-dividend.”

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The pound also fell slightly following weeks of positive moves (Image: GETETY)

He attempted to calm market fears, and added: “Despite the wall of worry which investors are being forced to climb and another feeble round of opening trades, the main indices are still comfortably in positive territory for the year, with the FTSE 100 remaining ahead by nine percent and the FTSE 250 by 15 percent.

But the pound is also suffering a similar fate to the UK stock indexes following several days and weeks of currency rises as the country exits the Covid pandemic.

Sterling is down by around half-a-percentage point to $1.3680 against the US dollar and just under €1.17 against the euro.

Viraj Patel at Vanda Research said: “It’s a perfect storm for foreign exchange markets right now. You’ve got a risk-off macro dynamics, weaker commodity prices, a hawkish Fed, weaker Chinese yuan.


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Coronavirus map live (Image: EXPRESS)

“A lot of these dynamics suggest it will be a tricky period.

“Outside of the broader macro risk regime, I still like Sterling as a currency because the Bank of England is more in line with the Fed’s hawkish policy.”

US markets also opened in the red, though not to the extent of its UK counterparts.

The Dow Jones fell marginally by 0.06 percent or 22.55 points to 34,938.14, while the S&P 500 index slipped slightly by 0.04 percent to 4,398.67. However, the Nasdaq edge up 0.23 percent to 187.32.

Roy Walsh

Roy Walsh

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