FTSE loses footing and falls again!

January 15th, 2009 by admin | Filed under Central banks, Daily News, Money Management, Recession, Stocks and shares, The Markets, UK Bank Accounts, UK Banks, UK Small Business, World Banks.

The FTSE took a bit of a beating yesterday closing with around 5% losses. The main area of doubt amongst investors appeared to be small to medium sized public companies. Lord Mandelson’ announcement of improved guarantees and easier access to credit appears not to have revitalised these companies as much as had been hoped.

Brokers continued to warn that it appeared to be difficult to predict how severe the current financial slump actually was and how long it would last, even optimists are being heard to say, “two to three years”.

The day’s trading saw the FTSE 100 fall 218. 51 points to 4,180.64, with sellers outnumbering buyers, particularly in the banking sector, and for the second day in a row. Also down was the FTSE 250 at 6363.59 a fall of 183.7 points.

Among the ailing bankers , HSBC was still falling fast yesterday, losing around eight per cent, (51.25p to 588.75p). This fall may have been caused by Morgan Stanley’s prediction that the group would be looking for a further injection of capital. Possibly as much as £20bn

The banking sector in its entirety was in a depressed state, with The Royal Bank of Scotland shares losing 18.4 per cent of their value, ( 9.4p, to 41.7p). Barclay’s shares were down 14.4 per cent, (23.8p, at 142.1p.)

Reasons to be optimistic were few and far between, with only four stocks showing any gains on the FTSE 100. The star of the show was Amec, gaining 6.4 per cent, (34.5p, to 572p) on the back of a positive trading statement for the last quarter.

On the other side of the “big pond” Wall Street is currently going through its worst week of trading since November, with the Dow Jones falling 4.8 and the Nasdaq losing 3.7 percent.

Two industry standards, chip maker Intel Corp. and Wal-Mart Stores Inc. are showing little optimism, and it was difficult to find a smiling face around.

Another reason for faltering stocks were the Labor Department’s employment report showing that unemployment rate jumped to 7.2 percent from 6.8 percent in November, with economist predicting a 7 percent rise.

Investors are waiting for the release of the “beige book” report, to be released early today to gather a picture of company strengths and weaknesses in each part of the country to try and pick out some companies to take a chance on.

In the currency front, the dollar continues to rise against other major currencies. Sterling values were:

pound/US dollar 1.45
pound/Euro 1.10
pound/Japanese Yen 1.29

Gold prices fell as well as light, sweet crude oil, reaching as low as$38.51 in electronic premarket trading on the New York Mercantile Exchange.