Global equity bloodbath plunges FTSE 100 to six-month low

Callum Keown
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Dow Jones Industrial Average Dives Sharply Downward
The Wall Street rout overnight has extended into Europe (Source: Getty)

A GLOBAL equity bloodbath plunged the FTSE 100 to its lowest level in six months on a “gut-churning” day for investors.

The sell-off began in the US on Wednesday before spreading to Europe, Asia, and trading floors across the world on Thursday.

Global growth concerns, the prospect of higher US interest rates, as well as the ongoing trade war between the US and China combined to send stocks tumbling.

The UK's blue chip index closed almost two per cent down, dropping to its lowest level since April and wiping £36bn off the value of its companies over the course of the day.

China's Shanghai composite index sunk to its lowest level in nearly four years on Thursday and suffered its biggest daily loss – 5.2 per cent – since the beginning of 2016.

The Dow Jones initially led the downward charge, losing more than 830 points – 3.2 per cent – on Wednesday and continuing its slide today losing a further 100 points.

Donald Trump took a swipe at Federal Reserve chairman Jerome Powell, saying the Fed had “gone crazy” by raising rates, which it has done three times this year.

“The bloodbath for global equities comes as investors adjust to a world of higher US interest rates," said Jasper Lawler, analyst at London Capital Group.

Lawler said investors were switching bets on growth stocks, such as Facebook and Amazon, to “more conservative” strategies.

European markets suffered heavy losses with the Eurozone Stoxx index – comprising companies from 12 countries – down 1.7 per cent.

The FTSE All-World index, of 3,100 companies across 47 countries, fell 1.28 per cent.

Barclays Smart Investor analyst Will Hobbs said it was a “gut-churning” day for investors but added it was unclear what was on the horizon.

He said: “The key question is whether such volatility speaks of a darker economic turn for the US and world economy, a recession even."

London-listed oil giants were also hit as crude prices slid back towards $80 per barrel from four-year highs of $86.74 last week.

But gold prices soared as the dollar appeared to be less of a safe haven amid the global turmoil.

Spot gold rose 2.7 per cent to $1,221 per ounce and miners Fresnillo and Randgold, both up more than eight per cent, were the best performers on the FTSE 100.

Research analyst at The Share Centre, Helal Miah, said: “The sell-off has been gathering strength for about two weeks now lead by the Asian markets as concerns were raised about China’s growth rate, but fingers will also point at the hike in tariffs between the US and China and the impending trade wars.”

Miah added: “It should not come as a big surprise, but the question that some investors will be asking is one of whether we will see a quick bounce back like we saw at the start of the year.”