FTSE 100 slumps over 2.5 per cent as global economy darkens
Britain’s FTSE 100 has tumbled 2.6 per cent today as weak economic data and political crisis fuel investor scepticism about the UK economy.
Read more: UK construction activity suffers ‘devastating’ drop as Brexit kills demand
US stock markets followed their British counterpart sharply downwards shortly after they opened, following more negative data for the world’s largest economy.
Traders were downcast after signs that the UK economy suffered a torrid third quarter after contracting by 0.2 per cent in the second.
Survey data today showed that construction sector activity fell at the second-fastest rate since the financial crisis last month. Yesterday, the manufacturing sector was shown to be close to recession, causing job losses to mount.
Worries over the global economy have also been exacerbated by weak manufacturing data from around the world. US factories suffered their worst month since 2009 in September, and the Eurozone economy appears to be in free-fall.
US markets were also driven downwards today by a weaker-than-expected employment report. The S&P 500 was down 1.3 per cent shortly after opening at 2.30pm UK time, while the Dow Jones industrial average had shed 1.2 per cent.
Germany’s Dax stock index was 1.8 per cent lower, France’s CAC 40 was down 2.2 per cent, and the pan-European Euronext 100 was down two per cent.
“Equities are in full retreat,” said Chris Beauchamp, chief market analyst at IG, “with one per cent losses or more common across European stock markets”.
“European equities have turned firmly lower… on the very reasonable assumption that, if things are that bad for the US, then they must be even worse for Europe.”
The FTSE’s fall also came ahead of Prime Minister Boris Johnson’s final offer to the European Union, about which Ireland and investors are sceptical.
Johnson’s proposal involves Northern Ireland staying aligned with large parts of the EU’s single market until 2025, but leaving the customs union with the rest of Britain.
Yet Ireland’s deputy PM Simon Coveny has already said he was “not too encouraged” by the plans, suggesting they will not gain the EU’s backing.
Read more: UK’s Brexit offer gets mixed reception
“The final tabled offer will fall short of what the EU requires. It will be rejected. Boris knows this,” said Neil Wilson, chief market analyst at trading platform Markets.com.
(Image credit: Getty)