FTSE drop was 'predictable' after May's election announcement
The stock market took an early hit this morning and was worse off after the Prime Minister Theresa May announced her intention to call a snap General Election on June 8.
And the FTSE plunge was as a result of a stronger pound and the falling price of commodities.
Around 70 per cent of the FTSE's income is made from overseas accounting for the drop of 90 points by 2pm GMT.
However it has been claimed that the market was giving investors jitters anyway.
Market commentator David Buik, of Panmure Gordon, said: "Prior to the announcement Sterling started to slide down to $1.2490, but the FTSE was still sliding – down 90 points due mainly to uncertainty.
"However post the statement Sterling rallied like a grilse back to $1.2660. However the FTSE surrendered another 30 points – down 125 at 7202 at 1.06pm, thanks to increasing support for Sterling, which damages the value of so many constituent stocks.
"Also frankly with a P/E ratio of 16.5 times earnings, the FTSE 100 was beginning to look a little rich for many peoples’ blood. So the reaction by investors was predictable."
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