FTSE indices nosedived as traders sweated political upheaval in Greece after PM Alexis Tspiras quit, paving the way for another election, placing a multi-billion euros agreed debt bailout in question. Financial stocks were hammered, oilies slipped with crude prices.
At the close, FTSE 100 was down 161.46 points, or 2.54% to 6206.43. WTI crude was down 2.47% and Brent fell 2.51%. Safe-haven gold was at $1158/oz. Wall St was heavily lower, as was Europe. Lower manufacturing data out of China last night only added to the bleak picture.
Weak Chinese manufacturing data weighed on the market. The flash Caixin/Markit manufacturing PMI reading of 47.1 was well down on the 48.2 expected. A reading below 50 signals a contraction in the sector while a level above that indicates an expansion.
Uncertainty concerning the Chinese economy continues to rattle stocks. At the moment the Chinese economy is in the middle of a moderate slow-down, however Chinese GDP is still estimated to be growing around 6.6% and therefore the scale of the slowdown doesn’t necessarily justify the negative impact it is having on stock markets around the world.
Locally, pay rises in Britain remained at 2% in the three months to July and showed little sign of picking up soon, survey from XpertHR, a human resources services company, revealed on Friday. The Bank of England is looking for an improvement in wages before raising interest rates.
The Office for National Statistics showed UK public sector net borrowing, excluding public sector banks, fell by £1.4bn in July to a surplus of £1.3bn compared with the same month last year, marking the first reported July surplus since 2012.
The figures were in line with expectations and came as income tax receipts increased 5.3% to £18.5bn – the strongest intake since records began in 1997.
Elsewhere, the euro was broadly flat against the yen, but surged 0.91% and 1.01% against the pound and the dollar respectively.
Gold prices jumped by up to 5% this week, cautious investors finally began to seek havens from the volatility in equity markets and emerging markets following China’s devaluation of the renminbi earlier in the month.