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Published On: Wed, May 29th, 2013

FTSE erases gains from Tuesday’s session

The FTSE 100 saw its gains from yesterday’s trading session wiped out by midday as investors became increasingly wary of the current situation in the US and the Federal Reserves suggestion that it could halt all monetary easing programmes as soon as next month if the US economy is showing signs of long term economic growth.

With better than expected consumer confidence data being released across the Atlantic yesterday and an increase in US house prices, investors were concerned about the possible cessation of the multi billion dollar programme. Adding those factors to the fact that the IMF cut its forecast for growth in China and worse than expected unemployment data from Berlin and markets around the globe were bound to be impacted. Compounding the declines were investors who had taken steps to lock in profits from yesterdays rise while waiting to see

The London based index was down by 134.84 points to 6627.17 at the end of the days trading, representing a loss of 2 percent, someway off the 6930 record that it was threatening to break early last week.

Only three companies avoided declines on the index, all of which were miners or oil companies whose stock advanced due to the rise of gold and oil. This is a common trend when equities decline as investors look for safer assets, of which the precious metal is one due to its movements traditionally running inversely to the markets. Oil’s recent gains and the upcoming OPEC meeting also attracted the more bullish investors. Eurasian Natural Resources Corporation PLC added 3.40, or 1.37 percent, Fresnillo PLC added 6.00, or 0.55 percent, while Petrofac Ltd added 1.00, or 0.07 percent.

The blue-chips’ biggest loss of the day came from National Grid PLC through somewhat unusual circumstances. 40 percent of National Grids investors are based in the US, where treasury yields have increased dramatically over the last two sessions. This will lead to their US investors expecting better returns from their investment in the British company, which it may not be able to provide.

Other losers for the day were United Utilities Group PLC, who declined by 4.07 percent, Aberdeen Asset Management PLC, which slid by 3.96 percent and SSE PLC, declining by 3.62 percent.

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About the Author

- Gregory previously worked for a leading financial news publication and is now assistant news editor of financialtrading.com.

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