FTSE 100 at lowest close since January

The FTSE 100 closed at its lowest point since January on Wednesday, owing largely to falls in minings stocks. The index closed at 6403, its lowest close since 14 January when it ended the day at 6388.

This plunge came after mining giant Glencore reported a £431 million first-half loss and lowered its trading earnings forecasts. The company's share price dropped 8% after the poor results were announced.

Rio Tinto, Anglo American and BHP Billiton also experienced dips in share price of around 4%.

"Markets are looking east and don't like what they are seeing," says Laith Khalaf, senior analyst at Hargreaves Lansdown.

Peripheral issue

"Slowing economic growth, currency devaluation, and stockmarket mayhem in China have hit commodities and mining stocks, and with them the UK stockmarket.

"The fact UK stocks fell so steeply [on Wednesday] despite Germany signing off on the Greek bailout underlines how peripheral this issue has now become, and how quickly the market can switch its focus."

In March the FTSE 100 surpassed the 7000 mark for the first time in its history.

Laith adds that because mining and oil companies make up about 20% of the FTSE 100, the index's performance is tightly tied to the welfare of those sectors.

"The FTSE 100 has returned 0.5% this year, including dividends," adds Khalaf, "but if you strip out oil and mining stocks it has returned 4.8%."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.