If October turned in the thirteenth best monthly market performance on record, then November is already doing its best to reverse that performance.
With news of a Greek referendum on the European debt deal reached last week, the Eurozone crisis has been thrown wide open again just when politicians thought they might have stemmed the tide. Global markets are lower and Italian bond yields rising on fears the contagion will spread from Greece rapidly if the country defaults - which a no vote could precipitate.
Banks are leading the markets lower thanks to concern about their exposure to European debt if Greece does default and the crisis spreads to other countries. Barclays, which reported reasonable results on Monday, is down 14.3p at 181p while Royal Bank of Scotland has fallen 1.59p to 22.64p.
Disappointing manufacturing figures from China have hit the mining sector, with Antofagasta off 70p at £10.97 and Xstrata 62.4p lower at 983.1p.
So ahead of UK GDP figures and the October purchasing managers index, the FTSE 100 has fallen 115.60 points to 5428.62. The French and German markets have lost more than 3% and, ahead of the start of the latest US Federal Reserve meeting, the US futures show the Dow Jones Industrial Average opening 127 points lower. Manoj Ladwa at ETX Capital said:
The wheels look set to fall off the European bailout effort as the Greek Prime Minister's call for a referendum sent the market into a tail spin this morning. Equities are trading lower from the open as the market begins to factor in an ever increasingly likelihood of a Greek default.
The only riser in the leading index at the moment is G4S, up 6.2p at 250.4p on relief it has called off its proposed £5.3bn purchase of Denmark's ISS, following opposition from a number of key shareholders. David Brockton at Espirito Santo said:
We do not believe management's case for building an integrated facilities business is lost as a result of its decision to not pursue ISS, in light of shareholder feedback. In our view, it was the scale of change in risk profile and direction which deterred support for ISS. We consequently hope management remains to deliver on G4S' organic growth potential, supplementing this through acquisition in either security or broadening into new markets through more modest incremental change. We reinstate a buy rating [from neutral], predicated on our confidence in the underlying G4S' business growth prospects.
