An emergency 0.5% rate cut on top of the Government’s £50bn (€63bn) banking bail-out failed to stop the FTSE 100 Index from sliding more than 5% during a volatile session today.
The blue-chip index fell 238.5 points to 4366.7 – its lowest level since August 2004 – as fears the economy is heading for a major recession outweighed any boost from policymakers.
Just eight Footsie stocks ended up in the black after see-saw swings, with HBOS and Royal Bank of Scotland the two banks better off. HBOS shares added 23p to 117p as investors speculated that its takeover by Lloyds TSB will survive following the initiative.
Royal Bank of Scotland, which plunged 40% on Tuesday, hardly made progress, rising just 0.7p to 90.7p after being much higher earlier in the day.
In rollercoaster trading as investors digested the rescue package, rival Barclays ended up falling 35.75p to 278.25p, with Lloyds TSB down 7%, or 15.5p to 210p.
Other banks fared poorly amid uncertainty about their level of exposure to the government’s proposals, in particular any dilution threat to existing stakes and possible curbs on future dividend payments.
Standard Chartered, which has no plans to issue any new capital, fell 151p to 1160p while HSBC was off 22.75p at 878.25p.
Despite the rate cut, supermarket giant Sainsbury’s was the Footsie’s biggest casualty, down 15% or 47p to 267.75p.
The fall came amid speculation that investor Robert Tchenguiz has offloaded his 10% stake in the group. Analysts also feared its like-for-like sales jump of 4.3% for the 16 weeks to October 4, which was slightly better than market expectations, could be hard to beat.
Sentiment was not helped by a forecast for negative growth next year for the UK economy from the IMF, and growth warnings from the Bank of England despite the rate cut.
Marks & Spencer had enjoyed some gains but succumbed to the market blues, going on to lose 9p to 220.5p.
In other consumer areas, Thomson holidays owner TUI Travel managed to rise 8.25p to 212p, with Premier Inn firm Whitbread adding 29.5p to 986.5p.
Hopes for a revival in the house market saw housebuilders featuring high up the FTSE 250 Index gainer’s board. Bellway was 56.75p higher at 540p, while Charles Church owner Persimmon leapt 28p to 400.75p. Debt-laden Barratt was not so fortunate, slipping 1.25p to 91.75p.
Miners were under severe selling pressure amid a downturn in commodity prices. Vedanta Resources was a major Footsie faller, down 141p to 864p.
And oil falling to 12 month lows around 86 dollars a barrel weighed down energy firms like Tullow Oil, which closed down 63p to 482.5p.
The Footsie’s four biggest risers were HBOS, up 23p to 117p, TUI Travel up 8.25p to 212p, Whitbread up 29.5p to 896.5p and ICAP which closed up 8p at 336p.
The four biggest fallers were Sainsbury’s, down 47p to 267.75p, Vedanta Resources down 141p to 864p, London Stock Exchange down 102p to 712.5p, and Petrofac which ended the day down 56.5p at 424p.