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FTSE Slips as Bond Fears Grow

Sun, 26th May 2019

The FTSE 100 hit its lowest point in 2018 so far, falling below the 7,600 mark, as a widespread stock market sell-off took place, prompted by fears over the bond market. The UK’s leading index fell by 75 points, with banks and mining companies being some of the poorest performers.

Fears over the health of the bond market continued to spread, with the yield on 10-year US treasuries remained above the 2.7 percent mark. In the United States, the Dow Jones was down by 1 percent and the S&P 500 was down by 0.9 percent, while the German DAX 30 and French CAC 40 are both down by 0.9 percent.

The VIX, which is a measure of volatility in the stock market, and is known as the ‘fear index’ is rising, and it hit its highest level since August earlier this week.

Standard Chartered, RBS, Llyds and Barclays all fell, as did Scottish Mortgage. Meanwhile, in the mining sector, Glencore, Antofagasta and Anglo American also struggled. The main fear right now, however, is the rise in the yield available from government bonds. The increase was not an overnight one, but it has only just started to attract investor attention. Surging bond yields could pull in interest from investors who are attracted to fixed income investments. The tipping point for when this could happen remains to be seen, but it appears to be drawing close, as stocks are falling not just in the USA but in the UK and Europe.

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