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FTSE 100 soars back above 5000 as US markets rise

The FTSE 100 has rallied back above 5000 after losing over 5 per cent this morning, while in New York the S&P 500 Index has risen following yesterday’s heavy falls.

At close, the FTSE 100 was up 1.89 per cent for the day at 5165, following steep early falls which saw the blue chip index down over 5 per cent to 4794. The S&P 500 was up 2.84 per cent, to 1151, at 12:08pm today after losing over 6 per cent yesterday.

In Japan, the Nikkei 225 recovered to close 1.68 per cent down at 8944 after falling 3 per cent earlier in the day. In China, the Shanghai Composite Index finished the day level at 2526 after early falls.

This followed heavy falls in the US on Monday in reaction to the downgrade by Standard & Poor’s. The S&P 500 fell 6.66 per cent to finish the day at 1,119 while the Dow Jones fell 5.55 per cent to 10,810.

Yesterday the FTSE 100 closed at its lowest level in over a year, at 5069. It was the first time the blue chip index had fallen by more than 100 points in four consecutive days.

More news on the debt crisis:

  • Chancellor George Osborne is to make a statement to the House of Commons on Thursday about the current economic situation.
  • The Spanish Government has promised budget cuts worth £5bn to justify support from the European Central Bank’s bond-buying programme launched yesterday. The move includes changes to corporation tax and cuts to health spending.
  • Royal Bank of Scotland predicts that the cost of buying the bonds of struggling member states could hit £739bn.
  • JP Morgan predicts gold would pass yesterday’s record high of $1,7199 to hit $2,500 a troy ounce by the end of the year as the market seeks safe investments.
  • Greece has imposed a two month ban on short selling after the Athens General index fell 6 per cent on Monday, the biggest single drop since February. The Hellenic Capital Markets Commission blamed “foreign investors” for the slump.
  • After downgrading the U.S Government’s credit rating too AA+ on Friday, Standard & Poor’s has also downgraded mortgage lenders Fannie Mae and Freddie Mac. The agency says the switch to AA+ is down to the extent of Government support for the mortgage market.
  • Despite the turmoil on markets, the British Retail Consortium says retail sales grew at their fastest annual rate since April last month. Sales excluding petrol are up by 2.5 per cent in June compared to last year.
  • PricewaterhouseCoopers has cut its growth forecast for Northern Ireland for the third time to 0.8 per cent. That fell from 1.3 per cent at the start of the year. They blame the Eurozone crisis, American debt problems and sluggish worldwide growth.
  • US President Barack Obama says the Standard and Poor’s downgrade should provide “a new sense of urgency” for Washington to tackle its debt problem. Over the weekend China called for the US to deal with its “addiction to debts”. Obama added that “no matter what some agency says, we will always be a triple-A country”.

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. The way things are going with the good old stock markets those of us that have a pension product will be soon able to apply the rules of trivial commutation.If our total pots fall to £18000 in value we will be able to take 25% cash lump sum and pay tax on the remainder and rid ourselves of these hideous products for ever.

  2. To brandish a product as hideous when the underlying funds/management hold more weight surely should be considered. Common misconception felt in the UK towards “hideous” wrappers for underperfoming/badly managed funds. Many UK pensions are as good as the next investments if managed correctly.

  3. I disagree Alex. For many people a personal pension is the wrong investment choice. The tax relief is largely illusory – what the government gives on contributions it takes from the annuity. Indeed, it could be argued that if the eal value of your pension ‘pot’ goes up, the government takes more in tax (on average) than it ever conceded in relief on contributions (unless you are a higher rate tax payer). Of course, if you have the opportunity to join a good occupational scheme (very few and far between unless it is a public sector scheme) then you must join – otherwise steer clear.

    So what are the other potential disadvantages of personal pensions ? Investment risk is the least of your worries. Annuity rates are abysmal and unlikely to improve given that we are all living longer. You, yourself, might die soon after buying an annuity. If you go into drawdown then the tax take on death is horrendous. If you need help in retirement because your total income is insufficient then your tiny pension will negate any help you might otherwise have received. If your total income including your pension is pretty healthy then HMRC may take away your age allowance.

    I could go on but you get the picture – pensions are a con-trick of government to have you tie up your money so that you don’t become a burden in later life and also enable the government to take more tax than they might otherwise have taken had you spent the money in the first place.

  4. Swings like these are nothing to do with the value of the companies, it is just speculators and fund managers manipulating the market for there own personal gain either directly or through bonuses at the expense of pension fund holders and other holders of mutual funds.

    The entire system needs reform, starting with looking at the obscene levels of remuneration of fund managers

  5. It seems that Lesley’s at it again.
    Don’t display your ignorance with such gusto. From your comments it would appear:
    That you/ your adviser hasn’t been managing your pension properly. A pension is only an investment with a few tax tweaks added.
    You haven’t been investing long enough. If you are old enough to contemplate taking benefits then you could have been investing in your pension for 15 years or more. Even when leaving out the great boon of tax relief you/your adviser must be very inept at not to be showing a profit on cost.
    I guess you would blame the car if you had a crash – not your bad driving. Same difference with the pension or your investment. No doubt you will expect the State to support you.

    If you bothered to read the business pages you would see that plenty of firms are making good profits. RTZ, S&N, BMW, Nestle to name a few. Just watch how well the listed pawnbrokers will do in the next year or so. In the end you don’t invest in markets – you invest in companies and many firms will do well no matter what trouble the State gets into. The trick is to find the right companies or the collectives which invest in the right sectors.

    Indeed with the current corrections now is a very good time to pick up some bargains. No doubt you are like the rest of the moaners – buying at the top and selling at the bottom like the rest of the lemmings.

  6. Harry-Take a chill pill.I can assure you that I read all the business news.My husband and I are retired with no mortgage,having self-built our home almost 20 years ago.We have a mix of investments including 3 substantial pension funds which we do not have to touch for years .I can assure you that we will not be buying at the top and selling at the bottom.You must learn to relax more Harry.

  7. George W Jensen 10th August 2011 at 1:33 pm

    I’m afraid the majority of those who respond to MM articles tend to be rude if not ignorant, self-important and holier-than-thou. Heaven forbid a “consumer” should wander into these hallowed pages. Perhaps “Hideous” was not the most appropriate word to describe pensions in general, but I would imagine Lesley has been discouraged from engaging from the advice community at large now. What was it that was said about “Assume”, Harry?

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