FTSE Biggest Fall Since 9-11

Posted by Rob

January 21, 2008

The FTSE 100 had its biggest single-day fall since the World Trade Centre attacks of 2001.

During the trading session the FTSE 100 fell 5.7%, matching the fall on September 11 2001. “The acrid smell of fear hangs over the City. I’ve never seen fear like this,” said David Buik, strategist at Cantor Index.

Financial stocks across Europe have experienced a similar drop in value as investors bail-out. The German DAX and French CAC-40 were trading 7% lower.

At present the FTSE 100 is only 100 points short of a 20% decline, which would mark a bear market. With the US markets shut closed today, the US market is likely to struggle.

Dollar Rallies Against Euro

In the currency market, the US Dollar has steadily risen against the Euro, despite woes hitting the equity market. The USD rally has continued off of last weeks performance.

A Look At The Chart

On Friday we saw the Euro fall against the USD as we can see from the green resistance line. The price action has moved well below the 55-day sMa (red line).

Interestingly the price has also moved almost exclusively below the 20-day sMa (blue line). The stochastic also shows a down-trend with lower peaks.

Notice however the most recent peak has broken through the resistance line (green line on stochastic indicator).

With the US markets closed today we could see continued strength against the Euro or simply consolidation to recent support levels. Medium-term looks bullish, but look for further Euro falls in the short-term.

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