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FTSE-100 Index tumbles on Fed’s bleak economic outlook


The index closed 223.36 points lower at 6,105.77, representing its sharpest daily fall since March

The FTSE-100 Index tumbled more than 100 points today, hit by a bleak economic outlook by the Federal Reserve in the US last night.

The index closed 223.36 points lower at 6,105.77, representing its sharpest daily fall since March. The German Dax decreased by 4.47%, while the French Cac moved 4.71% lower.

The Fed projected the US economy to shrink 6.5% in 2020 and signalled it plans years of extraordinary support for an economy facing a long road back from the COVID-19 pandemic.

In the US, the Dow Jones dove by 880 points after the bell as sentiment took a nosedive from the optimism which had driven it to a three-month high just days earlier.

The pessimistic outlook from the Fed was not unexpected, but right now investors are looking at potential declines further because markets are spooked by the possibility of a second wave of coronavirus infections, said Joshua Mahoney, markets analyst at IG Group.

Engineering and manufacturing firms were hard hit, with Melrose and Rolls-Royce plunging lower once again.

Catalytic converter manufacturer Johnson Matthey sank after it told investors it is cutting 2,500 jobs following a major hit from coronavirus.

The FTSE 100 firm also revealed plans to halve its dividend to shareholders as it announced the redundancies, which will remove more than a sixth of its workforce over the next three years.

Shares in the company dropped by 148p to 2,043p after it revealed it took a £60 million hit to profits from the virus.

British Gas owner Centrica also lost share value after it announced plans to cut 5,000 jobs as part of a major turnaround plan. More than half of the job losses will come from the business’s leadership roles, as Centrica revealed it would strip out three layers of middle managers, in a bid to cut bureaucracy.

Shares in the company slipped 1.71p lower at 40.12p at the end of trading.

Tui dropped lower after it extended the suspension of holidays for customers from the UK due to coronavirus travel restrictions. Shares fell by 41.7p to 444.6p.

The biggest risers on the FTSE 100 were Polymetal, up 32p at 1,536p, Fresnillo, up 8.8p at 776.2p, LSE, up 28p at 8,094p, and Tesco, up 0.7p at 227.7p.

The biggest fallers of the day were Carnival, down 164.5p at 1,190p, Melrose, down 12.65p at 111.15p, ITV, down 7.72p, and Rolls-Royce, down 31.7p at 321.6p.


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