Share prices at region’s firms hammered in market panic

The FTSE 100 fell for the seventh consecutive day of trading, with investors continuing to drop stocks in favour of safer assets. It ended down 3.4 per cent at 5,068.95, its lowest closing level for 13 months.

Miners, oil producers and engineers were sold with a vengeance, as the FTSE 100 closed at its lowest level since July 7, 2010.

Yesterday’s fall wiped another £46bn off the value of the FTSE 100, taking the overall amount lost in the last seven sessions to £210bn.

The European Central Bank’s foray into the bond market, buying Italian and Spanish bonds, helped the market rally slightly before the full impact of Friday’s downgrade of the United States’ debt rating by Standard & Poor’s triggered a massive sell-off.

“To me, these failed rallies are not a good sign and indicate the depth of investor concern,” said Louise Cooper, markets analyst at BGC Partners.

The FTSE 100 was a sea of red, as miners bore the brunt of the sell-off, on fears of a weaker global recovery dampening demand for commodities.

Investors ploughed into gold as a safe haven, driving it to an all-time high.

“The principal concern is the growth outlook and the extent to which the growth outlook and the global recovery is being compromised ... It’s all a hangover from the pre-crisis era, which was funded by leverage,” said Philip Poole, global head of macro investment strategy at HSBC Global Asset.

East Yorkshire engineering and conveyor belting group Fenner sustained an 8.7 per cent fall in its share price, closing down 28.6p at 301.4p. Its shares have fallen almost 30 per cent since hitting 426.7p late last month.

Citigroup said the market was pricing in a 27 per cent earnings per share downgrade to its 2012 forecasts for the engineering sector.

Croda, which hit a high of 2,115p a month ago, closed at 1,609p. The East Yorkshire-based natural chemicals group’s shares shed seven per cent yesterday and have fallen 24 per cent over the past month. Supermarket Morrisons, weighed down by concerns over weak consumer spending power and rising commodity prices, fell 1.9 per cent to 280.8p.

Sheffield insulation group SIG was down 5.4 per cent at 104.4. Since hitting 154.8p in May, its shares have plunged by about a third.

Emerging markets credit lender International Personal Finance was down 7.5 per cent at 238.1p.

On Friday Standard & Poor’s cut the AAA credit rating of the United States by one notch to AA-plus on concerns about debt levels in the world’s largest economy.

The downgrade could eventually raise borrowing costs for the US government, companies, as well as consumers.

Fears are also growing about the Eurozone’s ability to contain the sovereign debt crisis. The European Central Bank’s dramatic intervention in bond markets pushed down yields on Spanish and Italian bonds, but was not enough to stem the sell-off.

Carolyn Black, an investment manager at Leeds-based Redmayne-Bentley Stockbrokers, said the market turbulence was a “well-needed shake-out”.

“I don’t think it’s an overreaction,” she said. “I think it’s kind of needed.

“I don’t think there’s any quickfire solution. I think we will learn to live with these huge debt issues.”

Despite market panic, Ms Black said companies are much better capitalised than late 2008 when markets plunged on the credit drought.

“I don’t think the UK will fall back into recession. To me it does not feel as tragic or as severe (as late 2008). What happens in the US is another question.”

She said the plunge in many companies’ share prices may represent a buying opportunity.

“Fundamentally there’s nothing wrong with these companies,” she said. “Some companies have good news but they get absolutely hammered.

“There are some really good companies which for no reason other than wider markets have been dragged down.”

Analysts said more liquid stocks are taking the biggest hit.

“When funds find themselves forced to sell positions in panicked markets, the most liquid stocks bear the brunt of selling, simply because they can be sold,” said Singer Capital Markets.

A test of metal

Industrial metals fell sharply in a sell-off in risky assets and fears of a global economic slowdown driving down demand for metals.

Benchmark three-month copper on the London Metal Exchange slipped to its lowest in 11 weeks at $8,750 before closing at $8,770 from $9,040 on Friday.

Zinc and nickel fell to their lowest levels since late November 2010 and tin hit its lowest since September 2010.

“The focus for investors is on the implications of the current economic downturn and what impact this will have going forward,” said Gayle Berry, analyst at Barclays Capital.

“There are big questions that need to be answered.”