FTSE 100 falls by 200 points in less than 200 minutes

Equity markets continue to fall although falls in UK and US bond yields are a positive sign.

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The FTSE 100 is down another 200 points already today and its fall of more than 100points yesterday was for the fourth consecutive day, the first time this has ever happened.

Explaining the impact of these movements, Chris Alexander, head of investment strategy at BNP Paribas Wealth Management, said: “The UK market is valued on a 2012 forecast PE of 9.4x and 4.4% yield. At that sort of level and against a background of a fall in the FTSE 100 of 20% and in the FTSE 250 by over 20%, at some stage the ‘dead cat’ should bounce.

“Among those with most bounce potential are those stocks that are already over 25% down from July highs including some of the UK specialist engineers and the major miners; Rio ended the day in Australia up some 9% from its intra-day low.”

Last night the Dow Jones closed down 5.6% while the Nasdaq was down by nearly 7%. The S&P 500 fell by 6.66% and by the time it had closed every single stock in the index had hit negative territory for the first time in 15 years.

In Asia, the Nikkei opened 3.4% down but clambered back to close down by 1.68%; the Hang Seng is down 5.66%; the Shanghai Composite was in positive territory for much of the day but turned red to finish down 0.03%.

While equity markets continue to be hit, sovereign debt markets made money as bond yields fell sharply. Yields on ten-year US Treasuries fell 20 points from its Friday close to 2.37% compared to a high of 2.06% in 2008.

While the trend was similar, trade in UK gilts was less volatile with yields now standing at generational lows.

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