Tuesday just got worse and worse, a woeful US open and some expected, if unwelcome, news from the eurozone increasing the severity of the session’s already ugly losses.
The Dow Jones dropped 550 points as the bell rang on Wall Street, a dive that saw the tumble under 24800 for the first time since early July. On top of all the other issues investors are currently processing, Caterpillar (NYSE:CAT) ensured the Dow’s decline was nastier than the futures had initially suggested. The construction firm plunged nearly 10% after unveiling a disappointing 2018 guidance, one that carried an extra sting its tail due to the rise in manufacturing costs stemming from the impact of the trade war tariffs.
The eurozone found no way to staunch its bleeding as Tuesday went on; in fact, with the European Commission confirming it was rejecting Italy’s budget – giving the country 3 weeks for a rewrite – the region’s wounds only deepened. While the FTSE MIB shed 1%, it was its peers that suffered the most, with the CAC and DAX down 1.9% and 2.4% respectively. That sharp drop left the German index the wrong side of 11250, a level not seen in just shy of 2 years.
There was no way the FTSE was going to be able to avoid similar bloodshed. Macro-focused problems in its mining, banking and oil sectors – the latter struggling with reassurances from Saudi Arabia that the country can fill the supply gap left by the sanctions on Iran – sent the UK index down by more than 110 points, forcing it to a sub-6950, 7 month nadir.
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