FTSE 100 slides as US market slump sparks downward spiral

The FTSE 100 followed US stocks on a downward spiral this afternoon closing 0.9 per cent down for the day.

US construction giant Caterpillar set the tone with disappointing fourth quarter results as a slowdown in China and trade tensions were cited as reasons for the miss.

The Dow Jones lost more than 300 points in early trading and Europe swiftly followed with the German DAX sliding 0.7 per cent and the French CAC falling 0.9 per cent.

The FTSE 100 also suffered dropping below 6,760 points.

US market woes were compounded as the government shutdown was said to have cost the economy $11bn (£8.4bn) over the past 35 days.

Sterling, which had rallied to recent highs on reports the Prime Minister could take no-deal off the table, slipped 0.3 per cent against the dollar.

IG analyst Joshua Mahony said traders would be “treading carefully” ahead of tomorrow’s Commons vote on the Prime Minister’s ‘Plan B’.

Ocado was the FTSE’s biggest riser, climbing 2.1 per cent on reports that it could tie-up with Marks and Spencer over deliveries.

Rio Tinto rose 1.7 per cent after US investment bank Jefferies raised its target price on the company, predicting Chinese demand for iron ore to rise.

NMC Health was the index’s sharpest faller, dropping 3.4 per cent, followed by ITV, Imperial Brands, Lloyds and Barclays.

“Investors weren’t very hungry for Caterpillar, the stock plunging 9% as adjusted earnings fell far short of forecasts,” Spreadex analyst Connor Campbell said.

“That one of the reasons for the miss was the now familiar sight of the sector-disregarding slowdown in China only made matters worse, reminding investors of just what is at stake with the resumption of the US-Sino trade talks this week,” he added.