FTSE rounds off its worst-ever first-quarter performance

Mar 31 2008

London’s leading share index today rounded off its worst first-quarter performance since its launch 24 years ago.

The FTSE 100 Index has shed 754.8 points - or 12% - in the first three months of the year, as stock market turmoil wiped billions of pounds off the value of UK blue chips.

The Footsie closed at 5702.1 today, down from the 6456.9 opening mark on the first day of trading this year, marking the largest first-quarter fall since the FTSE 100 was founded in 1984.

Shares have plummeted amid fears of an impending recession in America and as the crisis gripping global money markets shows no sign of abating.

The top tier fought back last week after disastrous trading before the Easter break, rising 3.6% in a seemingly determined bounce-back from the 136.5 points fall seen the previous week.

But the rise was not enough to prevent the first-quarter performance from making history as the worst ever for the FTSE 100.

And the losses over the first three months of the year also saw the FTSE All Share Index - the aggregate of the FTSE 100, FTSE 250 and Small Cap Index - tumble by 11%.

With a history going back further than the top flight FTSE 100 Index, experts said today that the first-quarter decline was the steepest seen by the All Share for three decades.

David Schwartz, stock market historian, said the falls so far this year on the London market were “unbelievable”.

He said: “I don’t think there’s anybody in this market who has ever experienced this kind of volatility before.

“You have euphoria one day followed by clouds of pessimism the next, with heightened volatility causing massive intra-day swings - it’s unprecedented.”

The FTSE 100 today closed 9.2 points up after another turbulent day, with the market swinging from losses of 107 points at the start of the session.

David Jones, chief market strategist at IG Index, said investors should be braced for further volatility.

“With reports last week suggesting that the UK has a one in three chance of going into recession, it is probably going to take at least a couple of months of positive economic data to calm the nerves of investors and see some longer term confidence return to shares,” he said.

“With share prices in the US still unable to hold on to any meaningful recovery, the concern going into April will be that stock market weakness is here to stay for at least the short term.”

News of a cut-price sale and rescue of US investment banking giant Bear Stearns sent stock markets across the globe reeling earlier this month, with the Footsie plummeting 3.9% in one day.

Rumours of a funding crisis at the UK’s biggest mortgage lender HBOS added to the share misery, with the Financial Services Authority forced to launch an inquiry into market abuse as the bank suffered, despite strongly denying the speculation.

But HBOS has since recovered much of the ground lost and were up again today by another 4%, with fellow bank Barclays also higher with a rise of 3.25p to 453p.