The· FTSE The 100 recorded the biggest drop in more than a month on Friday, as the prospect of the US central bank delaying emergency stimulus measures caused massive sales across financial markets.
London’s Best Equity Index fell 136 points (1.9%) on Friday to 7017 points, the worst day-down since mid-May and the lowest closing price in a month.
Despite hitting a 16-month high on Wednesday, the week lost 1.6%, the worst weekly performance since the end of February.
The pound fell to $ 1.38, the lowest level since early May, as the US dollar soared to a 10-week high in foreign currency exchange. Sterling has been on track for the worst week against the dollar since September 2020. Sudden drop in retail sales across the UK in May Also hit the currency.
The European stock market also suffered significant losses, with Germany’s Dax falling 1.8%, pulling the STOXX 600 across Europe back from record highs earlier this week.
Federal Reserve Board rattles investors on Wednesday When most of the officials predicted that US interest rates would rise earlier than before, rising from record lows in 2023. Some policymakers believed that interest rates would rise as early as next year to counter rising inflation.
The central bank also suggested that it would soon begin to talk about slowing or shrinking its $ 120 billion monthly bond purchase program. This quantitative easing (QE) scheme has poured money into the financial system since the early days of the coronavirus pandemic.
This could shock the market and upset the “refre trade” that has boosted the share of mining, oil and banking companies since the deployment of the Covid-19 vaccine increased confidence in the economic recovery.
Engineering firm Melrose led the FTSE 100’s decline by 5.6%, followed by mining giant Anglo American, which fell 5% following a plunge in commodity prices. Energy company Royal Dutch Shell was down 4%, Barclays Bank was down 3.9%, and hotel chain Whitbread was down 4.5%.
Copper is on track for the worst week since March 2020, lowered by a strong dollar and a pledge to free industrial metals from national reserves to curb Beijing’s commodity prices earlier this week. I did.
Peter Garnley, Head of Equity Strategy, said: Saxo Bank.
Stock market losses accelerated after St. Louis Fed Governor James Bullard revealed that he expected the first rise in US interest rates next year. Mr Bullard said the Fed has a more hawkish view as US growth and inflation this year were higher than expected. Investors fear that US rate hikes will raise consumer and corporate borrowing costs and hurt other economies, leading to the world’s largest economic slowdown.
“We look forward to a good year and a good restart, but this year was a bigger year than we expected and inflation was higher than we expected,” Bullard said on CNBC. He told the squawk box show.
“I think it’s natural to lean a little more hawkish here to curb inflationary pressure,” he added.
Bullard’s comments helped lower the stock price in New York, where the Dow Jones Industrial Average fell by more than 1% at lunch and is heading for the worst week since January.
ThinkMarkets analyst Fawad Razaqzada said risk assets are suffering from a “mini-tapered tram.”
“Investors are worried that quantitative easing will taper off faster than expected due to the rapid rise in inflation,” he said.
The FTSE 100 recorded the largest decline in more than a month as the US dollar soared. FTSE
Source link The FTSE 100 recorded the largest decline in more than a month as the US dollar soared. FTSE