FTSE tumbles in wake of Wall Street volatility

Equities tumbled yesterday as the worst two-day performance on Wall Street since 1987, the prospect of rising interest rates on both sides of the Atlantic and the general election raised fears that the past two years' bull run in shares had finally run out of steam.

The FTSE 100 index of leading shares, which fell 112 points in early trading, closed 64.8 points lower at 4248.1. This was its second-largest fall this year after another volatile session on Wall Street gave investors little hope that the 300-point fall in the two trading sessions around the Easter break had run its course. Choppy trading in New York yesterday saw the Dow bounce around between plus 38 and minus 61 points, before closing at 6611.1, up 27.6 points.

Yesterday's fall in London, which follows a rise of almost 40 per cent in the UK market since the beginning of 1995, came as no surprise to dealers who had been forced to watch events in America from the sidelines during the Easter weekend. But having wiped out a quarter of Footsie's 4.7 per cent rise so far this year in one session, the fall left traders cautious about immediate prospects.

"There are quite a few things we need to get out of the way before we can have a crack at breaking new highs," said HSBC James Capel's strategist, Robert Buckland. "We need to get the election out of the way in the UK, and we'll have to see more numbers from the US to see if there will need to be more medicine in the form of higher interest rates."

Others felt the attack on UK shares, which wiped pounds 19bn off the value of the market at one stage, was inevitable but none the less harsh. "The UK market is taking a beating on the back of Wall Street, and it's a beating we don't necessarily deserve," said Simon Smith at Birmingham broker Albert E Sharp.

Wall Street aside, the biggest fear was that last week's quarter-point increase in US base rates was only the first of many such rises. "The reality is that this is the first of a series of rate rises in the US and the markets are readjusting to reflect that," said Martin Lupton, head of global equity trading at Dresdner Kleinwort Benson. At home, rates are expected to rise whichever party wins the election at the beginning of May.

In America, a degree of calm was restored to Wall Street yesterday as stocks steadied after two straight sessions of precipitate losses on Monday and last Thursday.

In spite of a fresh crop of strong economic news, the Dow Jones Industrial Average entered positive territory in morning trading after dipping 30 points straight after the opening bell. Wall Street none the less remains on edge as investors wait to see if New York stocks have only suffered a one-off correction that is now over or whether a longer-term bear trend is under way.

A significant factor is likely to be the role of the US mutual funds, which this week reported an unexpectedly poor performance, in value- gain terms, for the first quarter. Their average gain was a mere 2 per cent, the weakest in two years.

Confirming the continuing strength of the US economy, the Conference Board reported a 0.5 per cent jump in its index of leading economic indicators to 103.5 - the biggest such increase in a year.

The National Association of Purchasing Management, meanwhile, reported an increase in manufacturing output in March that was the highest for two years.

In London, almost one tenth of the FTSE 100's fall was attributable to just one share, BT. The 17.5p fall to 428p wiped more than 6.5 points from the index.

Comment, page 21

Market report, page 23

Voices
Scotland's First Minister Alex Salmond delivers his speech at the Scottish National Party (SNP) Spring Conference in Aberdeen, Scotland April 12, 2014.
voices
Arts & Entertainment
Jessica Pare as Megan Draper and Jon Hamm as the troubled, melancholy Don Draper
tvAnd six other questions we hope Mad Men series seven will answer
Life & Style
The new low cost smartphone of Motorola, 'Motorola Moto G', is displayed in Sao Paulo, Brazil on November 13, 2013. The smartphone, with dimensions 65.9mm W x 129.9mm H x 6.0 - 11.6mm D is equipped with a Qualcomm Snapdragon 400 with quad-core 1,2 GHz CPU, a 4.5-inch display and Android Operating System 4.3 and a suggested price of $ 179 USD.
techData assessing smartphones has revealed tens of millions of phones are at risk of being harvested
News
David Beckham is planning to build a stadium in Miami’s port for a new football team he will own
news... in his fight for a football stadium in Miami's port area
VIDEO
News
weird newsMan live-photographs cracking of mysterious locked box on Reddit
Sport
Oliver Giroud kisses the Arsenal badge after giving the Gunners the lead
sportArsenal 3 West Ham 1: Two goals from the German striker and one piece of brilliance from Giroud puts the Gunners back above Everton
News
Plans to decriminalise non-payment of television licence fees would cost the BBC £500m according to estimates drawn up within the Corporation
people
News
weird news
Arts & Entertainment
Seeing red: James Dean with Sal Mineo in 'Rebel without a Cause'
filmAs 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star James Dean perfected his moody act
News
Obesity surgery in rats has been found to change the way the body processes alcohol
news
Arts & Entertainment
Heads up: Andy Scott's The Kelpies in Falkirk
artThe Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
Life & Style
US Airways has been at the centre of a Twitter storm after it responded to customer complaints with a graphic sexual image
techUS Airways takes an interesting approach to customer service
Arts & Entertainment
Philip Arditti as Yossarian and Christopher Price as Milo Minderbinder in Northern Stage's 'Catch-22'
theatre
Arts & Entertainment
The Purple Wedding: Joffrey and Margaery Tyrell tie the knot
TV The second episode of the hit series featured a surprise for viewers
Life & Style
Back to nature: women with body issues have found naked yoga sessions therapeutic
lifeDoing poses in the altogether is already big in the US, and now it’s landed here – in mixed classes
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Management Consultancy - Operational Research Analysts

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Corporate Actions Consultant - Market data, ISO15022, presales

£45000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: Corporate Acti...

Prudential Risk/Operational Risk Associate - London

£350 - £400 per day: Harrington Starr: An opportunity has arisen at a FCA regu...

PhD/MSc educated Operational Research Analysts - Consultancy!

£35000 - £50000 per annum + Bonus + Benefits: Pro-Recruitment Group: You must ...

Day In a Page

Homelessness: Why is the supported lodgings lifeline under threat?

Why is the supported lodgings lifeline under threat?

Zubairi Sentongo swapped poverty in Uganda for homelessness in Britain. But a YMCA scheme connected him with a couple offering warmth and shelter
A History of the First World War in 100 Moments: When the world’s biggest shed took over Regent’s Park

A History of the First World War in 100 Moments

When the world’s biggest shed took over Regent’s Park
The pain of IVF

The pain of IVF

As an Italian woman vows to keep the babies from someone else’s eggs, Julian Baggini ponders how the reality of childbirth is often messier than the natural ideal
Supersize art

Is big better? Britain's latest super-sized art

The Kelpies are the latest addition to a growing army of giant sculptures. But naysayers are asking what a pair of gigantic horse heads tells us about Falkirk?
James Dean: Back on the big screen

James Dean: Back on the big screen

As 'Rebel without a Cause' is re-released, Geoffrey Macnab reveals how its star perfected his moody act
Catch-22: How the cult classic was adapted for the stage

How a cult classic was adapted for the stage

More than half a century after it was published 'Catch-22' will make its British stage debut next week
10 best activity books for children

10 best activity books for children

Keep little ones busy this bank holiday with one of these creative, educational and fun books
Arsenal 3 West Ham United 1: Five things we learnt from the battle between the London sides

Five things we learnt from Arsenal's win over West Ham

Arsenal still in driving seat for Champions League spot and Carroll can make late charge into England’s World Cup squad
Copa del Rey final: Barcelona are paying for their complacency and not even victory over Real Madrid will put things right

Pete Jenson on the Copa del Rey final

Barcelona are paying for their complacency and not even victory over Real Madrid will put things right
Rafa to reign? Ten issues clay courts will serve up this season

Rafa to reign? Ten issues clay courts will serve up this season

With the tennis circus now rolling on to the slowest surface, Paul Newman highlights who'll be making the headlines – and why
Exclusive: NHS faces financial disaster in 2015 as politicians urged to find radical solution

NHS faces financial disaster in 2015

Politicians urged to find radical solution
Ukraine crisis: How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?

Ukraine crisis

How spontaneous are the pro-Russian protests breaking out in Ukraine’s east?
A History of the First World War in 100 moments: The first execution at the Tower of London for 167 years

The first execution at the Tower of London for 167 years

A history of the First World War in 100 moments
Fires could turn Amazon rainforest into a desert as human activity and climate change threaten ‘lungs of the world’, says study

New threat to the Amazon rainforest:

Fires that scorch the ‘lungs of the Earth’
Liverpool, Chelsea and Manchester City: And the winner of this season’s Premier League title will be...

Who’s in box seat now? The winner of the title will be ...

Who is in best shape to take the Premier League prize?