Closing Comments 2nd Feb 2009

As we head into the final hour of trading, the FTSE 100 looks set to finish down roughly 1.5% for the day despite a minor rally late on.

The UK's leading index has seen a flurry of losses across the board, with the seemingly ever-turbulent financial sector taking the biggest hits: Barclays was posting losses just short of 11% by 3.30pm (London time) after having its credit rating downgraded, and RBS wasn't faring much better – down 5.5%. There wasn't much good news for investors looking across the Atlantic either; by mid-afternoon in the UK the Dow was showing a loss of around 0.7%, led by a drop of almost 5% for Bank of America.

As any recent gains for the FTSE melt away, the economic outlook seems set to remain frosty as far as investment prospects are concerned. With the MPC widely expected to implement a further rate cut later this week, sterling is likely to take a further hit against the dollar and euro – making it an undesirable hiding place for investors while the equity markets take a battering. Perhaps the one glimmer of hope is that the 4000 mark for the FTSE is continuing to act as a barrier against more severe losses – but with negative economic data weighing heavily, it could be tested even further this week.

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