10th Oct 2014 16:14
LONDON (Alliance News) - The FTSE 100 hit a 12 month low Friday, as stocks across the world tumbled amid concerns about weak eurozone growth, the spread of the Ebola virus, and geopolitical concerns.
Oil-related stocks were amongst the worst performers as the oil price also fell sharply amid warnings that the oversupply situation may get worse.
The FTSE 100 hit 14-year highs just over a month ago, but Friday it hit its lowest level in 12 months at 6,328.39 and closed down 1.4% at 6,339.97. Only 14 FTSE 100 stocks ended higher. The FTSE 250 hit a 15-month low 14,535.14 and ended the day down 1.2% at 14,641.58. The AIM All-Share index also fell to a 15-month low at 707.47, closing down 1.9% at 709.14.
The European equity markets opened lower, taking a cue from a weak Asian session overnight, and the weakness has continue through to Wall Street.
The French CAC 40 closed down 1.7%, having touched its lowest level of the year, and the German DAX closed at its lowest level of the year, down 2.4%. The DJIA was flat when the European markets closed, but the S&P 500 was down 0.5% and the Nasdaq Composite was down 1.3%.
Concerns about the eurozone economy has weighed on investor sentiment all week, as the IMF warned that the region is at 40% risk of falling back into recession. Economic data from the region's biggest economy, Germany, supported the IMF's view, as it reported a decline in factory orders, industrial production and exports.
"The powerhouse of Europe has failed to drag the rest of Europe into the next phase of recovery and is increasingly looking like it will be dragged back into recession due to the burden of its neighbours," said IG market analyst Alistair McCaig.
There were also concerns about Hong Kong, after thousands of people gathered near Hong Kong's financial district Friday, resuming pro-democracy protests after the government called off talks with student leaders. Chinese Prime Minister Li Keqiang warned that the protests erupting in Hong Kong put the region's prosperity at stake.
Li Keqiang also admitted China may not meet a target of economic growth of 7.5% this year, although he said being "somewhat" short should not be "over-interpreted." This statement comes ahead of important new loans data for September from the country and trade balances on Monday.
TUI Travel was amongst the worst FTSE 100 performers, down 3.6%, as the travel sector continued to suffer a sell-off driven by fears that the Ebola virus is spreading out of West Africa. TUI shares are down 13% over the week as a whole, since news of the first European Ebola case emerged. Cruise ship operator Carnival was also amongst the biggest fallers Friday, closing down 2.7%.
The price of Brent oil continued to fall, hitting its lowest level since November 2010 at USD88.06 a barrel Friday morning. The decline in recent weeks has been down to the oversupply and lack of demand of the commodity. OPEC, in its monthly report Friday, warned that warmer winter weather is expected to hit already slumping demand. In addition, Iran has cut oil prices to its customers, just days after Saudi Arabia's Aramco did the same.
Oil and oil services companies were amongst the worst performers throughout the day. The FTSE 350 oil and gas producers index ended the day down 2.4%, with Tullow Oil, down 5.5%, the biggest faller in the FTSE 100, while BG Group ended down 2.5% and Royal Dutch Shell 'A' down 2.4%. In the FTSE 250, Ophir Energy closed down 8.2%, Afren down 7.3% and SOCO International down 6.1%, amongst the worst performing stocks in the index.
Tullow Oil was amongst the worst performers because it also said its partner in the Arouwe block offshore Gabon hit non-commercial oil when it was drilling the Sputnik-1 well.
Utilities provider Telecom Plus, which trades under the Utility Warehouse brand, was by far the best performer in the mid-cap index, up 6.9%, after saying it expects to post first-half adjusted pretax profit and earnings per share "significantly ahead" of the previous year, leaving it comfortable in meeting market expectations for the full year.
Telecom Plus said it expects to increase its interim dividend for the six months to end-September by 19%, reflecting its confidence in achieving expectations of nearly 50% growth in adjusted pretax profit to GBP63 million for the year. The company added that it had seen customer numbers rise by 34,733 in the half year, taking its total customer base to 565,372. It is on track for its target of 70,000 new customers for the full year. It also increased its total number of partners by over 2,00 during the half year, boosted by an introductory offer in April.
Monday's economic calendar will also see the release of German wholesale price index at 0700 BST.
In the corporate calendar, FTSE 250-listed Essentra will release an interim management statement and AIM-listed Tristel will report half-year results.
By Neil Thakrar; [email protected]
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