Today the FTSE 100 Index crashed (ok, “dipped”) after Merv King’s warning that the country was not going to grow and also on the back of the news that France could lose is AAA rating.
The Bank of England has predicted a rise in inflation to 5% later this year and growth in the economy is unlikely to exceed 2%. It looks like interest rates will remain stable at 0.5% for the foreseeable future.
Only yesterday the FTSE 100 appeared to be just missed out on benefiting from the global recovery (albeit a small and brief one) because of the new pension crisis. However, it still managed to finish the day up slightly, which was a first in a while. In fact, for the last 7 days the FTSE 100 had fallen.
Royal Bank of Scotland and Barclays both saw declines today.
Hong Kong Exchange Hacked Off
Also in the news today, Hong Kong exchange has been attacked by computer hackers resulting in 7 companies having their shares suspended from trading. The computer attack stopped the Hong Kong Stock Exchange (HKEx) computers from providing updated information to investors and analysts. The motive for the attack is still not know.
Wall Street Decline
Wall Street continues to have a bad time of it too. The Federal Reserve have said that interest rates will remain low for the next 2 years, pretty much in line with Bank of England expectations. The Dow Jones opened 250 points down as a result.
Also news that HSBC is planning to sell of its credit card business to Capital One seemed to fuel more selling and doubt in the financial markets.
Supermarkets and Retail Suffer
To cap it all the rioting and looting in London and other spots around the UK has caused a major downturn in retail spending. Many shops remain closed and it is expected that some will never recover. In addition to this we have news that supermarkets are going to be fined £50 million by the Office of Fair Trading (OFT) for price fixing. The price fixing has been focused on the dairy markets and this fine follows an 8 year investigation.