The Blue Chip index fell for the fifth consecutive day in London while the global sell-off continues. The FTSE 100 on worries that the emerging markets as well as a fourth profit warning from gas and oil producer BG Group will result in aggravating the political turmoil presently hitting Egypt.
The index of the leading blue chip shares were able to close down 1.7pc (113 points) at the 6560.66 level last week albeit the global market sell-off. Moreover, Germany’s DAX slid down 0.33pc, Spain’s IBES slipped 0.95pc and France’s CAC fell 0.25pc. On Wall Street there was an early bounce in the Dow Jones index following a 2pc decline last week which weaken the trading at 0.2pc lower at the 15,835 when it closed. Furthermore, the S&P 500 diminished at 0.32pc along with the Nasdaq at 0.92pc.
The FTSE 100 was likewise affected by the BG Group modifying down its production policy because of the present supply problems due to the political unrest in Egypt; AT&T’s decision in backing from the bid for Vodafone; and the RBS promotion of an additional £2.9 billion of their provisions in order to breakeven its mishaps in their selling in an unscheduled update just before the closing of the market. BG shares closed at 13.7pc, RBS dropped 2.2pc while Vodafone fell 3,87pc.
Asian markets suffered a quick fall as investors reacted unfavourable to the decline of Wall Street last week over concerns in China’s worst emerging market route in nearly five long years.
The Turkish lira sank to a record low against the dollar last week which was due to the country’s central bank crisis meeting that prompted to the allegations of a potential rate increase.
The Emerging markets have been given only a few hours of relief last week following the Turkish central bank’s announcement of a conveyance to a special meeting deal with price stabilisation following the record low in the Turkish lira which plummeted by a disappointing 8pc last week against the U.S. dollar.
The announcement resulted in a wide-reaching effect in order to provide additional relief to the downward pressure across the EM sphere. This however is a vague turning point for the EM FX and the probability of a sell-off is still very likely.
The ongoing currency crisis apparently increases the complexities for the Turkish government which is already presently facing disturbance and has been fighting against the base rate increase for several months already as the lira diminished.
The fall in emerging market currencies soon followed a 12 pc decline in the Argentina’s peso last week which was sparked by the central bank’s decision to discard its efforts in support of the currency. It was by far the largest single-day decline since the crash in over a decade.
Finally, Capital Economics made mentioned in their statement that the market turbulence in emerging markets including the Turkish economy is potentially going to experience a new crisis in the near future.