Connor Campbell, Financial Analyst at Spreadex –
The European markets woke up to the viscera of the US and Asian sessions, and it was not a pretty sight.
With the Dow Jones dropping a record-breaking 1100 points last night, and the Nikkei following suit with its own 4.7% plunge, there wasn’t exactly much hope for the European open. The FTSE immediately dived 175 points after the bell, sending the UK index back below 7200 to its worst price since April last year.
The DAX, meanwhile, shed another 300 points, leaving it the wrong side of 12400, with the CAC down 2.2%. And all this is before the US open – though it’s early days yet, the prospect of a further 300 point drop from the Dow Jones, a move that would take the index under 24000, is only going to become more of a problem as lunchtime approaches.
The forex boards were slightly calmer this Tuesday. Yet even then the pound still fell 0.2% against the dollar, with cable now stuck below $1.40, and 0.4% against the euro, taking it to a fresh 3 week nadir against the single currency.
Seemingly the only hope for the markets at the moment is that investors suddenly decide that the sell-off has been a bit overdone – though in a way it is fitting, matching the astonishing, record-breaking recent rise of the global indices with an equally astounding, heart-stopping drop.
Admittedly the Bank of England could go some way to allaying investors’ fears of rising interest rates on Thursday, if Mark Carney issues a more dovish statement than forecast.