Market turbulence shows no sign of abating as FTSE 100 dips in and out of the red

While the Footsie index got off to an uncertain start this week, it started to show signs of recovering for a brief spell this afternoon. 

On Wednesday, the London-based index shed nearly 2 per cent of its value after the bell to briefly skim 6,600 – close to the two-year lows it hit in the week before Christmas. 

Today the blue-chip index stepped into positive territory once again, but had slid 41.57 points to 6692.66 by the close.

Across the pond, the US Dow Jones Industrial opened sharply lower and was later down 2 per cent or 413.43 points at 22,932.80. 

US markets are feeling the sting today across the board after global technology giant Apple cut its revenue forecast and fretted about the state of the market in China on Wednesday.

Within the UK the picture has been a bit better, as shares in retailers fared particularly well. Asos, Marks & Spencer, Tesco and Next were all on the rise amid hopes that fears over their performance have been overblown.

High-street fashion retailer Next posted better than expected Christmas sales figures today, with gains across its online operations.

Next’s shares jumped 6 per cent to £44.26 in early trading, with investors welcoming the positive update after what was a torrid year for many in the retail industry. They ended the day up 4 per cent or 173p at 4,350p.

According to one analyst, the energy and retail sectors are propping up the FTSE 100 index at the moment.  

Speaking to This is Money, David Madden, an analyst at CMC Markets UK, said: ‘The energy sector ,and to a lesser extent, the retailer sector, is cushioning the FTSE 100 from the aggressive downside move in the US markets. 

‘Also, the FTSE 100 isn’t technology focused, so it has avoided the worst of the Apple related decline.’ 

The FTSE 250 index, which provides a more accurate insight into the state of the economy than the FTSE 100, finished down 147.79 points at 17,438.91.

Turbulence: Apple's chief executive Tim Cook blamed a slowdown in China sales for falling revenues

Turbulence: Apple’s chief executive Tim Cook blamed a slowdown in China sales for falling revenues

Jitters: On Wednesday, China revealed that its manufacturing sector had shrunk for the first time in 19 months

Jitters: On Wednesday, China revealed that its manufacturing sector had shrunk for the first time in 19 months

Jitters: On Wednesday, China revealed that its manufacturing sector had shrunk for the first time in 19 months

While 2019 is already shaping up to be a roller-coaster for investors, the UK’s markets have in fact remained relatively unscathed today as turbulence hits the US this week. 

Technology giant Apple is dragging down the markets across America. Shares in Apple are down 8 per cent at $144.94. Apple shares peaked at $233.47 in October, but they have since lost nearly 40 per cent of their value 

Apple’s chief executive Tim Cook blamed a slowdown in China sales for falling revenues. China accounts for around 15 per cent of Apple’s revenues.

Mr Cook also said US trade tensions with China were having a negative impact on China’s economy. 

Late on Wednesday, the iPhone maker said it anticipated revenue of around $84billion for the three months to 29 December, down from an initial forecast of at least $89billlion.       

Tension: Mr Cook also said US trade tensions with China were having a negative impact on China's economy

Tension: Mr Cook also said US trade tensions with China were having a negative impact on China's economy

Tension: Mr Cook also said US trade tensions with China were having a negative impact on China’s economy

While China and the US temporarily agreed in early December to pause tariff escalations, markets remain jittery.

Data published by the US Institute for Supply Management today revealed that America’s manufacturing index fell to a two-year low last month.

The ISM said its purchasing managers index tumbled to 54.1 in December after rising to 59.3 in November, slumping its lowest level since hitting 53.4 in November of 2016. 

Mr Madden said: ‘Stock markets in Europe continue to be volatile. 

‘The morning session saw a large move to the downside, but we have seen some markets recover. 

Impact: Shares in luxury goods companies, for whom China has been a major source of sales growth, have also been knocked today

Impact: Shares in luxury goods companies, for whom China has been a major source of sales growth, have also been knocked today

Impact: Shares in luxury goods companies, for whom China has been a major source of sales growth, have also been knocked today

‘Late last night, Apple reduced their first-quarter revenue forecast due to weaker sales in China. 

‘In the early hours of Wednesday morning, China posted disappointing manufacturing figures, so for the past two sessions investors have been worried about a slowdown in the Chinese economy. 

‘This afternoon, the FTSE 100 was showing a small gain as energy and retailer stocks helped the market swing back into positive territory, but the British benchmark has turned negative again due to the aggressive move lower in US markets.’

One analyst says only time will tell whether Apple’s figures are symptomatic of a broader problem.  

Shares in luxury goods companies, for whom China has been a major source of sales growth, have also been knocked today.

Ralph Lauren shares are down 3 per cent and Tiffany & Co has dropped 2 per cent.

Neil Goddin, manager of the Kames Global Equity fund, said: ‘The major concern is that the miss largely came in China, with the question now whether this profit warning was specific to Apple, specific to a slowing Mobile Phone upgrade cycle, or a more widespread cyclical slowdown.

‘The coming days and weeks will tell us more about the Apple downgrade, so if we see further warnings across multiple sectors (luxury goods and industrials would be obvious bellwethers) then markets will likely continue to trade lower. Yes they have been weak, but they could go a lot lower if we truly are entering a meaningful slowdown.

‘Whether it be Brexit, trade wars or potential Chinese stimulation, trying to predict which direction the market is likely to trade in the coming few weeks and months is nothing more than intellectual guess work and in general we spend far too long hypothesising about it; we continue to look for strong stock ideas that we believe will outperform over the long term whatever the market conditions.’ 

On Wednesday, China revealed that its manufacturing sector had shrunk for the first time in 19 months, triggering a major knock-on effect in the markets.

Hong Kong was down 2.7 per cent on Wednesday, with Shanghai off 1.2 per cent and the ASX 200 benchmark closed down 1.6 per cent in Sydney.  

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