UK shares expected to tumble
Sunday 10 August 1997
Prices were already foundering late on Friday as the US went into free fall, cutting short the celebrations to mark the FT-SE 100 index breaching the 5,000 barrier for the first time on Wednesday.
US stocks suffered their worst one-day slide in more than six weeks. Bond yields surged, spurred by weak demand for new government debt and concern that inflation may be poised to accelerate, undermining confidence in corporate profits.
"If long-term interest rates continue to go up, stocks will continue to go down," said Charles Smith, a money manager at Fort Pitt Capital Group.
Bank shares such as Citicorp and Chase Manhattan and other financial companies will suffer the most, as their profit growth is interest-rate sensitive.
The Dow Jones Industrial Average fell 156.78 points on Friday to 8,031.22, or 1.9 per cent having reached a record 8,259.31 only last Wednesday. Only AT&T rose among the 30 stocks that make up the index. The market is still, however, up 24.6 per cent in 1997.
UK shares are registering a growing split between companies whose fortunes depend on the fluctuations of the pound and those more insulated from the swings of the currency market.
The Bank of England's success in talking down the pound after its fourth rate rise in as many months on Thursday was reflected in the stock market. The leading FT-SE 100 fell 55.5 points, or 1.1 per cent on Friday. On the other hand, the broader 250 Index soared, notching a 3.6 per cent gain in the week. Shares such as BBA and Williams Holdings that suffered falling profits as the pound soared against European currencies were snapped up.
The FT-SE 250 Index's gains this week hoisted the stock measure firmly into positive territory for the first time this year, and some investors say this could be the beginning of a broader recovery for Britain's beleaguered exporters.
"What you are going to see is more industrials, more of the 250s, reporting in the days ahead. They'll probably be reporting dullish figures, but on the other hand, people might say that's history," said John Hatherly, head of research at M&G Investment Management.
- 1 The BBC has just done more to eradicate ‘terrorism’ than all our wars since 9/11
- 2 Dog thinks owner is drowning in lake, dives in and tries to pull him out
- 4 Chilling drone footage captures Auschwitz ahead of 70th anniversary of liberation
Asteroid narrowly scrapes past Earth: how to watch the closest space rock for decades as it flies by
Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
Greece elections: Greek PM Alexis Tsipras takes aim at 'neo-liberal' Europe as country gears up for prolonged austerity battle
Pornhub star Mia Khalifa receives death threats after being ranked the site's top adult actress
Prince Philip set to be knighted by Australia: Celebrate by reading his greatest gaffes
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
30,000 reasons why the rhetoric on immigrants claiming benefits can stop now
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...