FTSE 100 ends week near 8% lower
Despite a flat close on Friday, the UK's blue-chips racked up fairly substantial losses for the week overall
London's leading index closed less than 1 point higher at 3,530.73, while the FTSE 250 index lost 1.75% to 5,831.55. Wall Street, meanwhile, slipped lower after the latest unemployment figures further confirmed the deteriorating economic outlook. With the world’s economies becoming further entrenched in a global recession, investors have been forced to come to terms with the likelihood that this recession will be longer and deeper than previously.
US non-farm payrolls dropped by 651,000 last month, while the nation’s unemployment rate jumped to 8.1%, suggesting almost 4.5 million people have lost their jobs in the States since the recession took hold.
In equities, Aviva was among the worst hit once again, extending Thursday’s 33% slump by a further 14% today as fears over its capital position following its decision to retain its dividend continued to spook the market. However, several analysts said Friday that the share price drop is overdone, while one pointed to short sellers.
Aviva ended the session at 163.3p, while peer Legal & General lost 6.8% to 24.8p and Prudential eased 5.3% to 209.25p. Not all financials felt the pinch though: Lloyds Banking Group outperformed for once, up 4.2% at 42p, amid reports it is close to sealing a deal with the Government to insure up to £250 billion of its assets. Standard Chartered also made headway, adding 5.1% to 752.5p, following a solid set of full-year results earlier in the week.
Mining issues were back in play after a dismal performance yesterday on the back of disappointment over China’s lack of additional stimulus announcements. Today four of the top five blue-chip risers were miners, led by Eurasian Natural Resources, 6.9% higher at 376.25p, and followed by Rio Tinto, up 5.3% at 1,825p.
Oils were also on the up as WTI light, sweet crude took on an additional dollar to trade near $45 per barrel at the time of the UK close. Royal Dutch Shell gained 3.9% to 1,440p, Tullow Oil ticked up 3.6% at 735p and Cairn Energy was 3.0% ahead at 1,815p.
Returning to the downside, Wolseley was the main casualty after the building materials supplier confirmed what many had long suspected: that it plans to raise around £1 billion in capital. Accompanying news of an imminent rights issue and new share placing, the group also announced it swung to a full-year loss in 2008 and said it will exit from its US loss-making business Stock via a divestment or joint venture. If markets deteriorate further, chief executive Chip Hornsby said, Wolseley would have to take further action.
Wolseley was 15.1% weaker at 140.4p by end of play, bringing its year-to-date performance to a massive decline of over 63%.
