FTSE closes at 2.5-month low in potentially significant session for the summer months
City Index June 10, 2011 3:23 PM
<p>The FTSE 100 ended at a new two-and-a-half-month low, closing below the 5800 level after it was weighed down by weakness in the heavyweight mining […]</p>
The FTSE 100 ended at a new two-and-a-half-month low, closing below the 5800 level after it was weighed down by weakness in the heavyweight mining sector following a 3% decline in copper imports to China. Continued concerns over Greece and eurozone sovereign debt also weighed on trader sentiment.
The FTSE 100 had a fairly turbulent last few hours in today’s trading session, losing 90 points to trade at its lowest level in two-and-a-half months. The fact that it has been a day of low volumes has added to the volatility of the UK Index and likely exacerbated the losses piled up for UK stocks towards the close.
The FTSE 100 traded below the psychologically important 5800 level and closed below the key 5787 support level. A continued bearish move next week could certainly open up a revisit of the 2011 low of just below the 5600 mark.
A surprising fall of 3% in copper imports to China tempered demand for mining stocks, forcing the sector lower by 2%. The fall in imports is not necessarily a shock, though coming off the back of already well entrenched concerns regarding longer term copper demand in the midst of Chinese monetary policy tightening, the data has seen an expected cautious reaction from investors who have sold out of mining stocks as a result.
ENRC was the top faller on the day, with shares slumping near 7% as the soap opera of a situation within the boardroom appeared to ramble on with another director speculated to be close to be quitting the board, unsettling investors.
The move by Saudi Arabia to offer more oil to refiners and speculation that the country could raise output by as much as 10 million barrels of oil a day has pressurised oil prices. This has also convinced many traders who had bought into oil on the back of the lack of consensus reached at OPEC earlier in the week to cash in their gains on masse. The effect of weaker crude oil prices, which fell by over 2% in afternoon trade, had a correlated negative impact on heavyweight oil stocks which also played their part in forcing the FTSE 100 lower by 1.4% on the day.