The stockmarket has tumbled after being hit by a triple whammy of no extra Federal Reserve stimulus, falling metal prices and changes to the FTSE’s minimum free float requirement.
The FTSE 100 closed 123.35 points down, ending the day at 5,366.80. The FTSE 250 was down 216.81 to 9,744.23, while the FTSE All-Share dropped 56.81 to 2,759.42.
Last night, the US Fed said it would keep interest rates on hold, as broadly expected. But the central bank also indicated that it would not be embarking on any additional quantitative easing in coming months, pushing markets across the globe down.
Following on the Fed’s announcement, the price of precious metals dropped – adding greater downward pressure on mining stocks.
An additional blow came from changes to the minimum free float requirement for the FTSE UK Index Series. All UK-incorporated companies on the FTSE All-Share index will have to increase their free float from 15% to 25%.
The Mexican-based precious metals miner Fresnillo was the day’s biggest faller, dropping 11.12% to 1,494.00p.
Fresnillo is one of the five stocks whose free floats drop below 25%, meaning they have 24 months to comply with the FTSE’s new requirements or be excluded from the index. It was also hurt by the falling price of gold.
Essar Energy, another firm affected by the FTSE change, fell 6.53% to 193.10p. Gold miner Rangold Resources dropped by 6.06% to 6,360.00p on the back of gold price declines, while Eurasian Natural Resources fell 5.64% to 611.00p owing to this and the FTSE change.
Copper miner Kazakhmys was another mining stock to fall after metal prices retreated, ending the day 5.42% down at 846.50.
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