Fears of a new dotcom crash gained momentum on Friday, wiping £20.2bn off the value of the FTSE 100.
The leading index tumbled 1.2pc to 6,561.7 and the mid-cap FTSE 250 slumped 1.6pc to 15,898.37, as British investors grew increasingly concerned about being caught in a tech bubble. Their anxieties were fuelled by a rout in the American stock markets on Thursday, when the Nasdaq stock exchange, favoured by technology companies, suffered its worst fall since November 2011. US tech stocks continued their decline on Friday, with shares in Facebook, Google and Twitter all sliding lower.
In London, tech shares were sold-off particularly aggressively. Microchip designers Arm Holdings and Imagination Technologies lost 4.5pc and 5.8pc respectively.
Internet-based companies also fell sharply. Takeaway services group Just Eat, clothing business...
boohoo.com and white goods retailer AO World, which all floated at lofty valuations in recent weeks, were on the back foot. Both Just Eat, off 6.1pc, and AO World, down 4.4pc, fell even further below their flotation prices. Boohoo slipped 7pc to the 50p float level.
Away from tech shares, other companies that were also perceived as being overvalued, such as airline stocks, were under pressure and contributed to the FTSE 100’s biggest one-day fall since March 3 and worst week for a month. Fears of a bubble reminiscent of the one that preceded the 2000 dotcom crash have grown the past week and also hit markets on Monday.
US markets continued to drop on Friday, with both the Nasdaq and the Dow Jones Industrial Average sliding further.
“The market is very skittish,” David Pavan, a portfolio manager at ClariVest Asset Management, said.
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