Stocks in London suffered their worst falls since the Black Monday crash in October 1987 yesterday as growing fears about the effect of the deepening financial crisis on the global economy prompted a wave of selling around the world.
The FTSE 100 index of the UK’s leading companies suffered its biggest points fall yet and its largest one-day percentage fall since Black Monday, plummeting 7.9% to 4,589 points – down 32% from last year’s peak – and wiping £93bn from the companies’ shares.
In the US, the Dow Jones Industrial Average fell below 10,000 points for the first time since October 2004, falling as much as 7.75%, to 9,525.32, before closing down 3.6% at 9,955.50, while European and Asian markets also saw dramatic falls. Trading was halted in several markets, including Brazil, where the Bovespa dropped more than 5 per cent and Russia, where shares fell by more than 19%.
The sell-off came in spite of a frantic scramble by governments to contain the crisis on one of the worst days yet in the 14 months of the credit crunch.
In the UK, where expectations have mounted that the government will be forced to take more action, the political ceasefire between Labour and the Conservatives ended as Alistair Darling, chancellor, branded opposition calls for the government to recapitalise banks “irresponsible” because they created hopes that might not be met.
At a meeting with leading bankers last night, Mr Darling discussed the possibility of a multi-billion-pound taxpayerfunded capital injection into the sector. A further increase in the government guarantee of retail deposits from their current level of £50,000 was also discussed.
Financial Times, The Times, Daily Telegraph