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 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. Waferthin 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 69.3 points at 3936.3..

That followed another heavy sell-off on Wall Street and big falls in Asia this morning.

Moving against the trend were the banks, including the three secured in the Government lifeboat. Lloyds TSB rallied 12.9p to 131.4p. Its shareholders have already voted overwhelmingly in favour of the Government-sponsored takeover of HBOS, up 7.5p at 71.8p.

Today, shareholders of the Royal Bank of Scotland, up 5p at 47.3p, vote on its proposed [pounds sterling]20 billion Government refunding plan. Sentiment in the financial sector was also boosted by news that the Saudis plan to raise their stake in Citigroup back up to 5%.

The latest stock-market slump has renewed fears about the solvency ratios of the big insurance companies. If the value of their holdings falls too far, they may be forced to sell stock into the market. As a result, Aviva lost 463/4p to 305p, Prudential 31p at 263p and Legal & General 6. …

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