London’s FTSE 100 index slid into ‘bear market’ territory amid fears that the UK economy could fall into recession.
Speculation that two US mortgage providers might have to raise fresh capital and make further write-downs prompted a ’sell off’ on Wall Street, making things very uncomfortable for a host of financial stocks on the UK market.
Richard Hunter, head of equities at Hargreaves Lansdown stockbrokers, said: “Today’s fall marks a full entry into bear market territory, even though most investors will have been feeling that this has been here already for some months. At this precise moment, it is difficult to identify from where a positive catalyst might emerge,” he added.
Fears over rising inflation are a concern for homeowners who are looking to the Bank of England for some respite, but any thoughts of a cut in the interest rate this week are most unlikely, despite the boost a cut would give the economy.
With crude prices refusing to drop below $140 per barrel and food prices increasing almost weekly, the threat of inflation remains severe and most experts expect the bank rate to remain unchanged.
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