Britain’s stocks plummeted without warning following dreary forecasts for the Eurozone economy and fiscal difficulties in the United States which was further obscured by preliminary relief over incumbent and re-electionists President Barack Obama’s status for re-election.
In the morning’s opening trade, the FTSE 100 badly hit a level previously not experienced for nearly two months as the Obama anticipated win fuelled high hopes for the US Federal Reserve would still hold on and maintain levels in its loose monetary policy. However, the European Commission’s predicted calculations regarding the Eurozone economy would hardly expand in the next year jump-started a long slide into the close for indexes across the Eurozone.
Although investors were can breathe with a sign of relief over Obama’s sure win; the majority still remain vigilant and concerned over the US “fiscal cliff” of about $600bn in spending cuts alone and a tax increase to begin early in 2013 which could have disastrous effects for economic expansion.
The reality is that the election had gone by and so swiftly that no glitches were ever considered regarding the clarity of the election result definitely aided the markets to open up much higher than previously anticipated. The downgrades to the gross domestic product (GDP) for the Eurozone led to the opening of a majority of the big markets in the US which in turn focused onto the fiscal cliff and unexpectedly hurled into a sell-off. The FTSE 100 in the end closed down at 1.58 per cent, or 93.97 points at 5,791.63.
No sector was spared the sell-off. The European stocks geared to the economic cycle gave the most ground, with miners, banks and energy stocks all were off by 2 per cent. French Bank BNP Paribas was able to manage its buck by tweaking the frail trend adding 1.1 per cent, buoyed by strong quarterly earnings. Ardently speaking, today’s movements just realistically portray the fickle reality and unpredictable nature of the majority of investors in the open market.