FTSE falters as Draghi drags on Europe markets - London Report

THE FTSE 100 index closed lower yesterday, alongside other European indices, after the European Central Bank’s (ECB) measures disappointed markets.

The index closed down 2.27 per cent, at 6,275 points, while the German Dax ended 3.58 per cent lower at 10,789.24 points and France’s Cac 40 also finished 3.58 per cent down at 4,730.21 points.

The ECB cut interest rates to minus 0.3 per cent from minus 0.2 per cent, but some analysts had expected a cut to minus 0.4 per cent.

The central bank also ramped up its asset purchase programme to the tune of €360bn (£257bn).

Mario Draghi did what he does best – which is nothing but talk a lot. Looking at the euro/dollar chart, one thing is clearly evident that shorts are getting squeezed out of the market and this why we have such a massive upside move,” Naeem Aslam, chief market analyst at AvaTrade, said. “The wider expectations were that Draghi is going to come with his guns blazing but today is certainly not the day for that.”

Sports Direct led the FTSE 100 lower, falling 5.43 per cent to 697p per share, after Goldman Sachs cut its target price for the company’s stock by nearly 12 per cent.

Meanwhile, miners also fell. Glencore slid 3.51 per cent to 90.22p per share, while Rio Tinto was 3.4 per cent down at 2,114p per share and Antofagasta dropped 2.62 per cent to 501p per share.

BHP Billiton also flopped 3.32 per cent to 787.40p and Fresnillo fell 2.27 per cent to 709.50p per share.

“I think [the sector] remains clearly under pressure… they’re seeing their earnings tumbling away and they can’t sustain dividends at current levels if their earnings are likely to remain down for any length of time,” said investment research analyst at The Share Centre, Ian Forrest.

In a subdued day on the FTSE there were just four companies that made gains: Berkeley Group, which rose 1.24 per cent to 3,352p per share; Meggitt, which rose 0.37 per cent to 376.40p per share; Sage Group, which rose 0.78 per cent to 581.50p per share; and Whitbread, which rose 0.28 per cent to 4,710p per share.

On the FTSE 250, Spire Healthcare tumbled 7.69 per cent to 303.50p per share after analysts at Investec down­graded the company’s stock to a “sell” rating.

Retailer Debenhams also fell 6.73 per cent to 79.65p per share after Goldman Sachs cast doubt on its profit outlook.