LONDON MARKETS: U.K. Stocks Fall To 10-month Low In Global Market Rout

02/06/18 12:22 PM EST

By Sara Sjolin, MarketWatch

U.S. stocks decline again on Tuesday

U.K. stocks dropped to their lowest close in almost 10 months on Tuesday, tracking a global market selloff that came after U.S. suffered their worst day in most in more than six years.

What are markets doing?

The FTSE 100 index fell 2.6% to 7,141.40, ending at its lowest close since April 2017, according to FactSet data. The index traded as low as 7.079.41 in the morning -- a 3.5% decline -- but started to trim losses as U.S. stock futures briefly swung into positive territory.

In an extremely volatile session (http://www.marketwatch.com/story/stock-market-live-blog-wall-street-lower-as-selloff-extends-to-3rd-day-2018-02-06), however, U.S. stocks opened in negative territory, with the Dow Jones Industrial Average down more 500 points at one point.

The pound was flat around $1.3953.

What is driving the market?

Stocks in the U.K. and Europe tumbled on Tuesday following a bloodbath on Wall Street on Monday, when the Dow suffered its biggest one-day point drop ever (http://www.marketwatch.com/story/us-stocks-poised-for-fresh-selloff-as-dow-futures-slide-120-points-2018-02-05) and ended 4.6% lower for the day.

The selloff came as rising bond yields and hints that U.S. inflation is rising faster than expected fueled concerns the Federal Reserve could raise interest rates more quickly than currently anticipated. Analysts also noted that stocks globally have rallied to all-time highs earlier in the year, setting the markets up for an overdue pullback.

Read:Here are 3 key takeaways from the stock-market selloff (http://www.marketwatch.com/story/here-are-3-key-takeaways-from-the-stock-market-selloff-2018-02-06)

Stocks in Asia followed suit, with Japan's Nikkei 225 index closing down (http://www.marketwatch.com/story/asian-markets-fall-hard-continuing-global-selloff-2018-02-05) 4.7%.

What are strategists saying?

"While the roots and drivers [of the selloff] are sure to be discussed for days, it looks to emanate from a perfect storm of reasons including, but not restricted to, a strong 2017 rally extending into January, low volatility, low interest rates, over-optimism and complacency, over-leverage and financial engineering, all coming to a head as investors react to the possibility of higher/faster interest rates rises with bond yields creeping higher to jeopardize the current market situation," said Mike van Dulken, head of research at Accendo Markets, in a note.

Which stocks are in focus?

Shares of BP PLC (BP.LN) dropped 1.5% after the oil giant reported its first quarterly loss since mid-2016 (http://www.marketwatch.com/story/bp-posts-first-quarterly-loss-in-more-than-a-year-2018-02-06), weighed down by one-off charges relating to the company's 2010 blowout in the Gulf of Mexico and the U.S. tax overhaul.

Hargreaves Lansdown PLC (HL.LN) fell 4.4% even after the investment manager said pretax profit rose 12% in the fiscal first half. Investment firms were broadly among biggest decliners, with Hargreaves rivals Standard Life Aberdeen PLC (SLA.LN) and Schroders PLC (SDR.LN) both ending 5.1% lower.

 

(END) Dow Jones Newswires

February 06, 2018 12:22 ET (17:22 GMT)

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