FTSE 100 off another 3 at 5200 as sell stampede continues

The sell stampede continued in full flow on Friday morning, marking one of the worst trading weeks for European stock indices in quite some time as european investors awoke to sharp losses in Asia and a 4.7% fall in US stock indices last night.

European indices lost between 2% and 3% in early trade, with the FTSE 100 losing over 3% and the Index being weighed specifically by heavy falls in Royal Bank of Scotland, whose shares dropped 20% at one point in reaction to disappointing earnings that missed analyst forecasts.

All heavyweight stock sectors – miners, banks and oil have traded heavily lower once again. In truth however, dealing screens are filled with red across the board and as such the FTSE’s losses over the last 48 hours have been speeded by broad based selling across multiple sectors.

It’s hard to pinpoint the trigger for this week’s stock market crash. Certainly the US debt situation has brought into focus the fragility of the path ahead for US growth, a factor merely exacerbated by the weaker than expected US economic data, which is becoming an unfortunate trend. The fact of the matter is that this week’s losses have been speeded by an investor stampede to join the ranks selling in an effort to prevent themselves from being caught out on the long side when asset prices are sharply falling. Stops being triggered along with the fact that this week’s falls have occurred in the month of August, when most fund managers are on their vacations have hardly helped.

Non-farm payrolls will be the big focus for the day and it gives investors another crucial opportunity at a time when sensitivities are incredibly high to gauge the US employment situation. The market is expecting non-farm payrolls to come in at +75,000 jobs, with private payrolls increasing by +105,000 and the unemployment rate holding stubbornly high at 9.2%. A strong payrolls number could be enough to trigger some decent bargain hunting in the afternoon session but its hard to envisage investors wanting to carry too much risk into the weekend.

RBS shares plunge 20% at one point
RBS shares plunged as much as 20% at one point this mornign before recovering slightly after reporting a pretax loss of £678m for the second quarter, hurt by insurance compensation charges and a writedown of exposure to Greek debt. The earnings missed analyst forecasts and following the already severe market reaction over the week, shareholders sold their holdings off en masse, with share prices hitting a new two year low in the process.

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