BullBearings , the Fantasy Stock Market Game

The FTSE plummeted yesterday (Thursday 26th June) to its lowest level since March and now stands 14 percent lower than at the start of the year. If it wasn’t for the miners and oil stocks the FTSE would be even lower. All but three stocks in the FTSE 100 lost ground today, some spectacularly. The catalyst for today’s fall is the all too familiar story of oil rising and pretty much everything else falling, particularly financials.

Wall street fought a brave fight on Wednesday and managed to close on an up tick, despite taking a pounding from Boeing shedding 6.9% after a poor rating from Goldman Sachs. After the bell, however, reports from Nike and Research in Motion (makers of Blackberry) drove futures lower and hinted at the sort of day Thursday would be. Today Goldman Sachs put the boot into another sector (the financial sector) and with General Motors hitting a 53 year low and oil dramatically rising (at one point over 3.5 cents in just 15 minutes!) the DOW plummeted, closing at 11,453 - down over 3%.

The FTSE, however, was orchestrating its own demise long before the US markets opened and was already down 90 points by 14.30. London Stock Exchange shares led the way after unveiling plans to create a pan European trading platform which failed to excite analysts; the shares closed down over 13%.

Amongst the retailers DSG International was the downward driving force after reporting a 30% fall in annual profits and took fellow retailers Kesa, Next, Marks and Spencers, Carphone Warehouse, Tesco and others with them.

Banks continued their recent bad run and took another knock from Fortis announcing plans to raise up to €8.5bn of new capital. Barclays was the biggest loser, falling almost 8.25% with Lloyds TSB down 6.6%, Alliance and Leicester down 6.57% and HBOS down 5.48%. Bradford and Bingley (which is not in the FTSE 100) was the only bank to close up today after the prospect of an alternative rescue plan attracted buyers.

Today (Friday 27th June) we have housebuilders Berkley Group reporting their results. Given the state of the housing market it's sure to be bad news-it's just a case of how bad and how much has already been priced into the stock and the market as a whole. On the economic front we have a final estimate for strength across the UK economy (Gross Domestic Product statistics) over the first quarter period being announced. A previous estimate announced in late May saw a rise of 0.4pc over the final quarter period of 2007, the lowest rise in three years although still firmly in positive territory.

Food for Thought
A report from Albert Edwards, global strategist at Société Générale, that equity markets could lose 70 per cent of their value from the peaks of October last year added to the unease today. If that prediction were to be realised the FTSE 100 would fall to around 3,000. These doomsday scenario predictions quoting colossal figures rarely come to fruition, but the mere fact economists are talking in these ball parks is cause for concern.