Yesterday saw the FTSE close some 250 points down, a 4.1 per cent loss that meant the index fell through the glass ceiling of 6000, eventually finishing on 5858.9.
The fall came off the back of the largest American mortgage lender Countrywide borrowing some £5.7bn as it failed to attract sufficient short-term financing in the wake of crises.
The FTSE 100 has now lost £242bn since its market high in June 2007 – a loss of over £4,000 for every Brit.
Blue Planet Worldwide Financials Investment Trust manager Ken Murray warned yesterday that stockmarkets could fall another 20 per cent and that the financial markets are entering the worst banking crisis in decades.
Murray said: “The credit cycle has turned, bad debts are soaring, banks will go bust and stock markets will fall much further. People need to be told the truth as opposed to being spoon fed palliative words.”
Meanwhile, F&C income fund manager Ted Scott warned that problems with the credit markets will spill over into the real economy meaning the UK stock market has further to fall.
Scott said: “I believe that some contagion to the real economy is now inevitable. The consumer pumped up on cheap credit has kept the economy ticking. But given the record levels of indebtedness, consumers will now wish to rebuild their savings, particularly if unemployment starts to rise.”