On what some are calling ‘Black Monday’ the UK’s main index was hit to the tune of £40bn today as investors flee from risk.
Connor Campbell at Spreadex said: “So far, since the initial yuan devaluation on August 11th, estimates suggest that the global markets have haemorrhaged around $5 trillion in value.
“In fact, £40bn today alone has been lopped off the FTSE 100, with the UK index now only a 5% decline away from entering a bear market.”
The FTSE 100 continued to drop as the day progressed, losing 202 points or 3.2% to 5,984.
Investors have followed a sell-off in China, which saw the Shanghai Composite register its biggest one-day loss for more than eight years, down 8.5% to 3,210.
Alastiar McCaig at IG said: “Regardless of what the Chinese government and PBoC might be saying and doing, they are currently learning a lesson that many have learned before them, namely you can only fight against market forces for so long before you end up losing.”
Markets across the world continued the sell-off trend, particularly in Europe where the German Dax was 2.88% lower while the French Cac40 lost 3.1%.
In America, analysts are expecting similar losses when the markets open.
Ilya Spivak, currency strategist, at DailyFX said the absence of meaningful events in European and US markets suggest the falls will continue throughout the day.
“S&P 500 index futures are trading down over 2% ahead of the opening bell on Wall Street, bolstering the case for continued risk aversion.”
Meanwhile, the Dow Jones is expected to lose more than 400 points or 2.6% nad the Nasdaw is forecast to drop 4% or 167 points.
In corporate news, Bunzl (LON:BNZL) released half year results which were in line with market expectations and acquired four new businesses, one in Austria, one in the US and two in Australia.
Keith Bowman, at Hargreaves Lansdown said: “Fuelled by on-going cash generation, the group’s bolt-on acquisition led strategy continues to deliver, with resultant cost savings generated, as businesses are consolidated, remaining central.”
Despite the good news, shares dropped 3.5% to 1,722p.
The sole riser on the FTSE 100 was RSA Insurance (LON:RSA) after talks with Zurich progressed well over the weekend, with a deal likely to value the company at £5bn.
Time is running out for a deal to be done before tomorrow’s deadline and Zurich has asked for an extension. Shares in RSA rose 1.66% to 499p.
On the FTSE 250, with Brent Crude and West Texas Intermediate dropping 4% and 3.9% respectively, Premier Oil (LON:PMO) was the biggest faller, losing 11.4% to 91.4p, while Tullow Oil (LON:TLW) lost 8.4% to 185p.
The more UK-based index lost 3.1% to 3,342.
In small caps, African Potash (LON:AFPO) led the way higher as it signed its first memorandum of understanding (MoU) with a Zambian fertiliser supply company.
Shares skyrocketed 55% to 1.63p after it announced the first supply deal following the landmark agreement struck earlier this month with Comesa - the free trade union of 20 African countries.
On the other side of the coin, Minera IRL (LON:MIRL) sacked interim CEO amid allegations of impropriety.
The board voted unanimously to remove Diego Benavides. Shares dropped 16.1% to 3.25p.