Update: The FTSE 100 has fallen by 4%, dropping firmly into bear market territory as the oil price suffered another steep fall. The UK blue-chip index fell 235 points, or 4%, lower at 5,641 as a slump in US markets at the open sparked a renewed drop on the FTSE 100. That represents a fall of more than 20% from its intraday high of 7,123 set in April last year, placing the index in a technical bear market.
Only three FTSE 100 stock managed to avoid the sea of red, with Randgold Resources (RRS) the biggest riser, up 2.9% higher to £43.92 as investors fled to the safe haven of gold.
A fresh slump in the oil price weighed on the index, with the price of Brent crude dropping to $27.70 a barrel, down 3.7% on the day.
The falls came as the International Monetary Fund issued a stark warning over global growth, as it cut its forecast for the year to 3.4% from 3.6%.
‘Risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalised slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the United States,’ it said.
‘If these key challenges are not successfully managed, global growth could be derailed.’
[Source: New Model Adviser – Daniel Grote – January 20, 2016]