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Global market sell-off continues Global markets continue to fall
(10 minutes later)
UK shares have fallen sharply in early Friday trading on the back of a sell-off in global stock markets.UK shares have fallen sharply in early Friday trading on the back of a sell-off in global stock markets.
The FTSE 100 lost 53 points, or 0.84%, in the first minutes of trading on the back of Thursday's 3.2% slump - the biggest percentage loss in three years. The FTSE 100 lost 41 points, or 0.66%, in early trading on the back of Thursday's 3.2% slump - the biggest percentage loss in three years.
Concerns about the impact of higher global interest rates on company profits, takeovers and loan defaults has hit world markets.Concerns about the impact of higher global interest rates on company profits, takeovers and loan defaults has hit world markets.
Asian shares ended more than 2% lower, with similar losses on Wall Street. Asian shares ended more than 2% lower, after similar losses on Wall Street.
Worrying conditionsWorrying conditions
The FTSE 100 was trading down 52.7 points, or 0.8%, at 6,198.5 by 0805 BST. The FTSE 100 was trading down 41.1 points, at 6,210.1 by 0820 BST.
Analysts had predicted a further dip when UK trading resumed, but said that because most of the year's gains had been wiped out in one day, the market was now undervalued.Analysts had predicted a further dip when UK trading resumed, but said that because most of the year's gains had been wiped out in one day, the market was now undervalued.
Germany's Dax index opened 1.6% lower while France's Cac-40 lost 0.54%.
Japan's Nikkei average closed 2.4% down, lost 418.28 points, or 2.4%, to end the week on 17,283.81.Japan's Nikkei average closed 2.4% down, lost 418.28 points, or 2.4%, to end the week on 17,283.81.
Hong Kong's index was trading 2% lower while Chinese shares also ended in negative territory. Hong Kong's index was trading 2% lower while Chinese shares were also in negative territory.
It followed New York's Dow Jones Industrial Average losing 311.5 points, or 2.3%, to 13,473.57, while the S&P 500 shed 2.3% to 1,482.66.It followed New York's Dow Jones Industrial Average losing 311.5 points, or 2.3%, to 13,473.57, while the S&P 500 shed 2.3% to 1,482.66.
Asian investors had used Wall Street's decline as an excuse to lock in profits said Kitty Chan, director at Celestial Asia Securities.Asian investors had used Wall Street's decline as an excuse to lock in profits said Kitty Chan, director at Celestial Asia Securities.
Worries that have been out there for the past couple of years are coming to a head right now Edward YardeniPresident, Yardeni ResearchWorries that have been out there for the past couple of years are coming to a head right now Edward YardeniPresident, Yardeni Research
"After all, markets worldwide have gained considerably in recent months," she said."After all, markets worldwide have gained considerably in recent months," she said.
Analysts and investors have been warning that a number of factors are combining to create worrying conditions for equity and credit markets.Analysts and investors have been warning that a number of factors are combining to create worrying conditions for equity and credit markets.
"Worries that have been out there for the past couple of years are coming to a head right now," said Edward Yardeni, president of Yardeni Research."Worries that have been out there for the past couple of years are coming to a head right now," said Edward Yardeni, president of Yardeni Research.
Over the past few years there has been a boom in company profits, house prices and mergers and acquisitions.Over the past few years there has been a boom in company profits, house prices and mergers and acquisitions.
Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases.Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases.
That period of cheap cash now seems to been coming to an end with central banks worldwide, including the Bank of England, raising their rates to slow stubbornly high inflation.That period of cheap cash now seems to been coming to an end with central banks worldwide, including the Bank of England, raising their rates to slow stubbornly high inflation.
At the same time, oil prices have climbed, raising fears that inflation could also pick up again because of higher energy costs.At the same time, oil prices have climbed, raising fears that inflation could also pick up again because of higher energy costs.
'Appreciating risk''Appreciating risk'
Markets are in "risk reduction mode", said Thomas di Galoma of Jefferies & Co.Markets are in "risk reduction mode", said Thomas di Galoma of Jefferies & Co.
As stock prices tumbled bonds rallied, with investors looking for assets that could guarantee them steady, and relatively safe returns.As stock prices tumbled bonds rallied, with investors looking for assets that could guarantee them steady, and relatively safe returns.
"You have a classic flight-to-quality rally," said Dean Junkans of Wells Fargo Private Bank, adding that markets outside of bonds were "finally appreciating risk"."You have a classic flight-to-quality rally," said Dean Junkans of Wells Fargo Private Bank, adding that markets outside of bonds were "finally appreciating risk".
Bill Schultz of McQueen, Ball & Associates said: "A lot of people are moving out of stocks, out of riskier fixed income into short-term Treasuries."Bill Schultz of McQueen, Ball & Associates said: "A lot of people are moving out of stocks, out of riskier fixed income into short-term Treasuries."
"If the stock market recovers, you will see the rally pull back.""If the stock market recovers, you will see the rally pull back."