Investors rattled by prospect of new eurozone crisis amid slowdown in global economyLeading shares suffered their biggest daily fall since the middle of October, hit by renewed fears about the global economy, uncertainty in Greece following snap presidential elections and a surprise profit warning from Tesco.The FTSE 100 finished 142.68 points or 2.14% lower at 6529.47 as a combination of worries unsettled investors. The Athens market recorded its biggest one day fall since 1987, with the country failing to exit its bailout amid uncertainty over its political future after the election news.Markets don’t like surprises but had three big ones on Tuesday that sent European shares for a tumble. China shocked markets by tightening credit conditions by raising collateral standards on loans only weeks after loosening conditions by cutting interest rates. At the same time Greece announced it will bring forward its Presidential election to this month and Tesco announced a big surprise profit warning.Chinese regulators have made lower-rated bonds ineligible as collateral for loans in an attempt to block the rise of margin trading and short selling. Chinese authorities are engaging in selective tightening and easing within the economy attempting not to reinflate the housing/credit bubble but also support growth in key areas needed to boost domestic consumption.Following on from the takeover bid not materialising, we believe these results are not as strong as one would have hoped to recover more of the lost ground, price-wise. The industry is fast evolving which presents some risks to the business so it is highly encouraging to see the changes it is making to address the shifting dynamics. We do think private equity interest in this space will remain high given Iomart remains a highly profitable and cash generative business. Continue reading...
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