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”.