Newspaper article The Evening Standard (London, England)

'Late Plunges' Warning as Footsie Ruled by Fear

Newspaper article The Evening Standard (London, England)

'Late Plunges' Warning as Footsie Ruled by Fear

Article excerpt


BIG movements in share prices in the last hour of trading have become a regular feature of stock-market trading in recent days, and could lead to increased volatility in the weeks ahead.

The FTSE 100 index's losses more than doubled to 202.8 points, or almost 5%, in the final 60 minutes yesterday and there were further major losses to digest this afternoon. Wafer-thin trading conditions were partly to blame, but Liverpool Victoria Asset Managers' Alan Capper says the moves are mostly driven by fear.

He warns that in these high-speed global markets, investors and traders are too scared to run positions overnight in case bad news from New York or Tokyo prompts a further sell-off in London the next morning.

"Unless traders want to remain awake all night, they have little choice but to shut down any remaining open positions they have in the market," he adds.

This practice is often seen on a Friday night, with traders unwilling to run long positions over the weekend, but it has never before been seen on a daily basis such is the extent of investor nervousness created by the credit crunch and global recession.

After London's sell-off yesterday, shares were on the slide, diving back below the 4000 level again, leaving the Footsie 100 down 188.8 points at 3816.8, its lowest since April 2003.

It was matched by fresh falls on Wall Street this afternoon, where investors had to cope with a disappointing Philadelphia Federal Reserve survey, a big rise in jobless claims to their highest in 16 years and a slump in Citigroup's share price to record lows. The Dow was down 208.9 at 7788.36. Moving against the trend were the banks, including the three secured in the Government lifeboat.

Lloyds TSB rallied 6.9p to 125.4p.

Its shareholders have already voted overwhelmingly in favour of the Government-sponsored takeover of HBOS, up 4.3p at 68.6p. Today, shareholders of the Royal Bank of Scotland, up 3.3p at 45.6p, were voting on its proposed [pounds sterling]20 billion Government refunding plan.

The latest stock-market slump has renewed fears about the solvency ratios of the big insurance companies. …

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