FTSE 100 snaps four-day rally on US concerns
The FTSE 100 ended down today, registering a loss of 25.39 points, or 0.4 percent, closing at 6348.82. There was an air of uncertainty on the London Stock Exchange as investors awaited the results of the Federal Reserve’s meeting in the United States, leading to a selloff as investors looked to lock in the profits from the recent four-day rally. The chairman of the Federal Reserve, Ben Bernanke, is not expected to address the press until the markets in Europe are closed.
Investors were reluctant to hold on to assets overnight as there was a significant possibility that their value could decline before the beginning of tomorrow’s session, a fact which is emphasized by the FTSE 100’s 7.2 percent decline since May 22nd when the Federal Reserve chairman made his initial comments on the potential tapering of the central bank’s bond purchasing.
While the cessation of the Federal Reserve’s $85 billion a month bond buying program was top of the agenda, there were very few other catalysts for individual stocks. British Telecom declined by 5.6 pence, or 1.8 percent, on the news that CEO Ian Livingston would be departing the company. Mr. Livingston will take up the position of Minister of State for Trade and Investments for the British government, while being replaced by Gavin Patterson at BT Group PLC.
Elsewhere Tesco PLC advanced by 8.7 pence, or 2.59 percent, as investors sought assets that they felt were undervalued. Tesco PLC has been hit by many negative reports of late, such as worse than expected earnings from their international operations and improved revenue announcements from their competitors. Investors clearly felt that the food retail giant had been undervalued, driving the stock up. Two other significant advances in food retail sector were made by WM Morrison Supermarkets PLC and J Sainsbury PLC, who both rose by 1.02 percent.
Steelmaker Evraz PLC declined by two pence, or 1.71 percent, after a Czech trade union official announced that the steel mill in the Eastern European country would be closed throughout July and for half of August due to a decline in the demand for the metal, presumed to be caused by recent data from China.
Aggreko PLC, United Utilities Group PLC and Severn Trent PLC propped up the FTSE 100 with declines of 5.25 percent, 4.75 percent and 3.91 percent respectively.