Wall St plunges to its lowest since US election
By Christopher Brown-Humes in London and Dan Roberts in New York
Published: April 15 2005 21:39 | Last updated: April 15 2005 21:39
news.ft.com
Wall Street on Friday plunged to its lowest level since November's US presidential election amid fears of slower US economic growth and a mixed start to the first quarter earnings season.
London shares had led the way down, with their worst week since July last year. The FTSE 100 ended the week with a 1.1 per cent fall to 4,891.6, while the mid-cap FTSE 250 lost 1.3 per cent at 7,072.2.
Concerns that the world's biggest economy might be entering a new soft patch were exacerbated by the latest University of Michigan consumer confidence index, which hit its lowest point since September 2003.
Even good news including a drop in the oil price and strong earnings data from General Electric and Citigroup was shrugged aside as investors focused on persistent worries such as General Motors. The Dow Jones Industrial Average closed down 1.9 per cent on the day at 10,087.51, having fallen 420 points in three days or 3.6 per cent on the week. This was its worst weekly performance for more than two years, helping to cancel out the entire rally that has taken place since George W. Bush was re-elected on November 2.
The fear also spread to debt markets, which until recently had been suffering from expectations that stronger economic growth would lead to inflation and higher interest rates.
“The markets are in a state of confusion - everything is down except for Treasuries,” said Kingman Penniman , a credit analyst at KDP Investment Advisors. “If you had gone out for a day or two and come back you would be scratching your head.”
This may finally close the window of opportunity for private equity companies to complete leveraged buy-outs a major source of recent takeover activity.
“The last few days have been particularly horrid in the high yield markets,” said James Attwood, managing director at The Carlyle Group. Investors have been rattled by worse-than-expected US retail sales figures during the week and by disappointing earnings from IBM and Sun Microsystems,two technology bellwethers. “It looks like the soft patch is back,” said Paul Ashworth, international economist at Capital Economics.
A trend that had started with weaker payrolls and retail sales had spread to business and consumer confidence. Other global markets also struggled as Japanese equities had their worst week of the year with the Nikkei falling 4.2 per cent to 11,370.69. |
