Big drop in stock markets follows World Bank news

Stock markets suffered a sharp sell-off yesterday, as the World Bank radically downgraded its economic forecasts.

The organisation said that global GDP would drop by 2.9 per cent this year, far worse than its previous prediction of 1.7 per cent.

Investors sold shares on the news, leading to the FTSE 100 dropping 2.6 per cent and the S&P 500 3.1 per cent.

The flagship London index closed yesterday at its lowest level since April and traded largely flat this morning.

Crude oil also trimmed some of its recent gains, declining to around $67 a barrel from over $70 last week.

Speaking to news agency Bloomberg, John Wilson at Morgan Keegan, commented: ’Nobody is ready to get the trumpets out and herald the end of the recession … The worries are still out there.’

Angus Campbell at Capital Spreads told Reuters: ’A negative move from oil is proving negative for equities as well and they are very highly correlated at this moment in time.’ADNFCR-2318-ID-19231780-ADNFCR