UK markets fell sharply on Tuesday, with miners leading the entire FTSE 100 lower. The overall market drop comes as UK traders and investors had their first chance after a long-weekend to react to election results in France and Greece. The election results from both countries could potentially threaten Europe’s political and financial stability.
“The FTSE 100 lost 1.78% to hit a new 2012 low as traders in London returned to their desks and sold out of risky asset classes such as the miners and banks,” said Joshua Raymond, chief market strategist at City Index. “Political deadlock in Athens threatened the country’s bailout and [Francois] Hollande swept to victory in France, a victory itself that investors in London are concerned could threaten the countries good relationship with Germany.”
Darren Sinden, senior sales trader at Silverwind Securities explains that this political turmoil led to poor performance for miners: “The concerns about the direction that EU economic policy will now take [took] centre stage and the very real likelihood of a Greek exit from the single currency has allowed the [US] dollar to gain ground on the euro. Of course a stronger dollar has a negative effect on commodities and commodity-related stocks.”
Market Winners and Losers
Polymetal International (POLY) saw its shares fall by nearly 9%, while shares in the precious metals group Fresnillo (FRES) dropped by nearly 7.5%. These were the main market losers on the FTSE 100, but many other miners also saw their shares prices bid down by traders and investors.
The only company that saw a significant, lasting rise in its share price during the trading day was Tullow Oil (TLW). Shares popped up by nearly 3.5% after the oil company announced that it had discovered further oil reserves in Kenya.
By the close of the trading day, the FTSE 100 index had fallen by 1.78%, or 101 points, to 5,555. The FTSE 250 index slumped by 2.54%, or 284 points, to 10,873.