Week 14, 2012: The Stock Market

Summary: A number of factors contributed to the biggest daily fall so far this year in the FTSE 100 yesterday, and other major stock indices around the world faced similar declines.

What does the chart show? The red line represents the daily adjusted close price (the price at the time the markets closed, adjusted for dividends and splits) of the FTSE 100, the index of the share price of the top 100 companies in the UK. The blue line shows the same thing for the DAX, which is the index of the top 30 companies in Germany.

Why is the chart interesting? Although the DAX has fallen by a larger amount one other time this year (on the 6th March), yesterday was the largest daily drop in the FTSE 100 so far in 2012 (a fall of 2.3%). This has been blamed on a combination of two major factors: a worsening economic outlook in the US and the failure of a Spanish bond auction to raise as much money as it was targeting (indicating weakness in the Euro).

The FTSE has continued to fall today after weak manufacturing data was released.