Fears over globalization have caused FTSE/pound to take a brutal beating Growth and the Delta Variant

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. The FTSE 100 suffered a dramatic decline of up to 2 percent earlier in the day, when its value plummeted by an astonishing PS50billion. The dramatic market declines have caused the FTSE 100 index to plummet to a three-week low. It is now just above its key 7,000 mark.

The UK’s top share index has been impacted by losses from energy giants and miners due to lower commodity prices.

James Smith, an economist with ING said that “a theme has developed across the markets is that spread of Delta variant is a bigger economic issue than what investors were pricing into, which is weighing down on economy-sensitive sector 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.

Anglo-American, a London-based mining company, saw its share prices plummet to 2910.00p at 3pm. Antofagasta’s shares fell by more than five percent earlier in the day.

European share indexes have taken a beating, with Paris’ Cac-40 down 2.7 per cent and Frankfurt’s DAX falling by 1.8percent.

After dropping six consecutive sessions, oil prices fell to their lowest point in three months. Brent crude oil has dropped 2.8 percent to $65.96 per barrel.

Richard Hunter, Interactive Investor’s head of markets, stated: “In Britain, the market has not been immune to the growing level of international considerations. It also has been feeling some pressure due to lower summer trading volumes which can tend to increase share price movements.

“In addition to the general weakness of commodity prices, the FTSE 100 is also being hampered due to a handful stocks being ex-dividend.”

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He tried to soothe market fear and said: “Despite investors being made to worry and an additional round of trading, the major indices remain comfortably in positive territory.” The FTSE 100 is still ahead by 9 percent, while the FTSE 250 is up by 15 percent.

The pound, however, is suffering the same fate as UK stock indexes after several weeks and days of currency increases following the exit from the Covid pandemic.

Sterling fell by just half a percentage point to $1.3680 against US dollars and under EUR1.17 towards the euro.

Viraj Patel, Vanda Research stated that “it’s a perfect storm right now for foreign exchange markets. A risky macro dynamic, lower commodity prices and a Fed that is hawkish, as well as a weaker Chinese Yuan, creates a dangerous environment.

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These dynamics indicate that it is going to be difficult.

“Except for the macro-risk regime, Sterling is still my favorite currency. The Bank of England’s hawkish policies are more aligned with mine.”

The US market opened also in red but not as much as its counterparts in the UK.

The Dow Jones index fell by 0.06 percentage or 22.55 point to 34.938.14, while S&P 500 index dropped slightly by 0.04 per cent to 4.398.67. The Nasdaq gained 0.23 percent, however, to 187.32.

Publiated at Thu, 19 August 2021 17:50.13 +0000

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