Market Close
Federal Reserve inspired losses in the US did little to help the UK’s main index this afternoon.
Markets globally were lower as investors digested the news that there was no news - or at least no hike in interest rates.
Chris Beauchamp at IG, said: “Going into last night’s Fed meeting, talk revolved around how damaging a rate hike would be to equity markets.
“It turns out that no hike can also be rather problematic, especially when accompanied by a sober statement and downgrades to economic forecasts.”
In the US, the benchmark Dow Jones dropped 234 points to 16,441, the tech heavy Nasdaq shed 46 to 4,864, while the S&P500 lost 23, at 1,967 shortly after the bell rang on Wall Street.
In Germany, the Dax slumped 271 points to 9,958 while France's Cac40 lost 108, at 4,547.
Back in London, the FTSE100 ended 82 points lower to 6,104, after a bizarre moment earlier in the day.
Shares in the FTSE 100 Index dropped exceptionally by about 1% due to an unusually large trade by an investor.
The London Stock Exchange was forced to halt continuous trading for five minutes and hold an auction after the so-called "basket trade" of about 101 stocks.
The trade caused a 60-point or 1.1% drop in the Footsie, with eight or nine stocks particularly badly hit.
The event, which occurred around midday, affected British American Tobacco (LON:BATS), Diageo (LON:DGE), HSBC (LON:HSBA), National Grid (LON:NG.), BHP Billiton (LON:BLT), Vodafone (LON:VOD), BP (LON:BP.) and Rio Tinto (LON:RIO).
Trying to prop the index up were the miners, which rose as the gold price gained US$20, or 2% to US$1,137, its highest level since early August.
That boosted shares in Randgold Resources, (LON:RRS), up 134p at 3,863p. Mexican silver miner Fresnillo (LON:FRES) also brightened 20p to 610p.
Away from the index, UDG Healthcare (LON:UDG) said it has entered into an agreement to sell its United Drug Supply Chain Services and its MASTA unit for €407mln to US drug distribution company McKesson. Shares leapt 47p to 540p.
In the small cap space, Private & Commercial Finance Group (LON:PCF) said it is trading ahead of expectations for the year due to portfolio growth.
Additionally, shareholder Somers has converted its shares and loan to its subsidiary Bermuda Commercial Bank which intends to convert it all into equity by the end of the year.
This, the company said, will add more than £20mln to the group’s net assets. Shares jumped 13% to 21p.
Conversely, shares in Ferrexpo (LON:FXPO) tumbled 32% to 40p after the Ukrainian iron ore miner said the bank that holds more than half its cash had been declared insolvent.
Oil and gas company LGO Energy (LON:LGO) spilled 5% to 1.24p after first half revenues more than doubled to £6.6mln as production in Trinidad increased significantly.
Haydale Graphene Industries (LON:HAYD) ticked up 1.5p to 164p as it won a number of research grants totalling more than £450,000.
Another graphene group, Applied Graphene Materials (LON:AGM), rallied 26p to 214p as it reported better-than-expected trading and outlined expansion plans.
US Open
It was pretty clear the direction equity markets were going Friday - downwards - and the US was no exception.
US stocks sank at the open, along with European counterparts as traders digested the news that there was no news - or at least no hike in interest rates.
After a two-day policy meeting, the Fed decided the call would be 'hold' on rates, citing concerns over the global economy, particularly Chinese growth.
The benchmark Dow Jones dropped 234 points to 16,441, the tech heavy Nasdaq shed 46 to 4,864, while the S&P500 lost 23, at 1,967.
In London, FTSE100 dropped 98 points to 6,089, while the DA in Germany slumped 327 and France's CAC eased 139, at 4,516.
Mike van Dulken at Accendo Markets said dealers had expected either a hike with dovish comments or a hold with a warning to be ready for a hike next time.
"The Fed’s surprise decision to hold pat shows external factors clearly outweighing US domestic progress," he said.
Alastair McCaIg, at spreadbetter IG, said: "As with all economic releases there are at least two ways of looking at an unchanged interest rate decision; it is good news as businesses can continue to enjoy cheap borrowing and hence a bounce in equities, or on the downside the economic recovery is not yet far enough advanced to be able to handle an increase in rates and markets sell off."
In company news, AK Steel Holding Company (NYSE:AKS) saw shares rise 5.69% after the steel manufacturer issued an earnings outlook for the third quarter, which beat expectations.
The group expects shipments of around 1.86mln tons in the three months, a 3% increase compared to the second quarter of 2015, mainly because of the increased shipments to the automotive market.
TRACON Pharmaceuticals (NASDAQ:TCON) raced to the top of Nasdaq, gaining 36.91% to US$16.06 after the biopharma group unveiled results at the 18thWorld Congress on Gestational Trophoblastic Diseases in Densapar, Bali, Indonesia.
Adobe Systems (NASDAQ:ADBE) rose 3.8% to US$83.36 as it had a 'buy' stance repeated by Jefferies and a day after the largest developer of graphic-design software’s strong rise in Creative Cloud software subscriptions in the past quarter failed to make up for its downbeat outlook for the current quarter.
Lunchtime Report
Top flight shares fell deep into the red on Friday as traders digested implications of a decision to leave the US cost of borrowing unchanged.
The FTSE 100 Index fell 127 points to 6059 after the Fed surprised markets not only by holding interest rates but also by giving a dovish statement.
Analysts said markets saw the move as a sign that the US central bank was concerned about the impact on the US economy of global economic turmoil.
Mike van Dulken at Accendo Markets said dealers had expected either a hike with dovish comments or a hold with a warning to be ready for a hike next time.
"The Fed’s surprise decision to hold pat shows external factors clearly outweighing US domestic progress," he said.
In Britain, there was more negative economic news as the Office for National Statistics reported that UK productivity was 20% short of the average for the other G7 countries in 2014, which was the widest gap since comparable series began in 1991.
On the other side of the Pond, the S&P was expected to open 10 points lower, the Dow Jones 74 points lower and the Nasdaq 22 points lower.
The downbeat news from the Fed buoyed the gold price, which rose 1.6% to US$1135 an ounce.
That boosted shares in Randgold Resources, (LON:RRS), up 11p at 3842p. Mexican silver miner Fresnillo (LON:FRES) also brightened 23.5p to 613.5p.
Oil prices gave a mixed reaction to the news, with a barrel of Brent crude and a barrel of US light crude both falling.
Oil major BP (LON:BP.) was 7p down at 338.7p, Royal Dutch Shell (LON:RDSB) leaked 41p to 1614.5p and BG Group (LON:BG.) deflated 17.5p to 997.5p.
Shares in Ferrexpo (LON:FXPO) tumbled 17.25p to 41.75p after the Ukrainian iron ore miner said the Ukrainian central bank had decided to declare the bank that holds more than half its cash insolvent.
Oil and gas company LGO Energy (LON:LGO) spurted 0.12p to 1.18p after first half revenues more than doubled to £6.6mln as production in Trinidad increased significantly.
Haydale Graphene Industries (LON:HAYD) ticked up 1.5p to 164p as it won a number of research grants totalling more than £450,000.
Another graphene group, Applied Graphene Materials (LON:AGM), rallied 20p to 207.5p as it reported better-than-expected trading and outlined expansion plans.
UK Oil & Gas (LON:UKOG) gushed 0.02p to 1.72p as it hired Matt Cartwright as its new chief operating officer.
LONDON OPEN
Top flight shares began Friday on the back foot after the US Federal Reserve left the cost of borrowing unchanged.
The FTSE 100 Index fell 11.13 points to 6175 after the Fed surprised markets not only by holding interest rates but also by giving a dovish statement.
Mike van Dulken at Accendo Markets said dealers had expected either a hike with dovish comments or a hold with a warning to be ready for a hike next time.
"The Fed’s surprise decision to hold pat shows external factors clearly outweighing US domestic progress where labour markets have improved markedly and growth is at least present, even if inflation remains suspiciously absent," he said.
The downbeat news from the Fed buoyed the gold price, which rose 1.25% to US$1131 an ounce.
That boosted shares in Randgold Resources, (LON:RRS), up 120p at 3849p. Mexican silver miner Fresnillo (LON:FRES) also brightened 14p to 604p.
Oil prices gave a mixed reaction to the news, with a barrel of Brent crude rising 0.4% to US$49.28 but a barrel of US light crude ceding 0.6% to US$46.62.
Oil major BP (LON:BP.) was 4p down at 341.7p, Royal Dutch Shell (LON:RDSB) leaked 10.5p to 1645p and BG Group (LON:BG.) deflated 7p to 1008p.
Shares in Ferrexpo (LON:FXPO) tumbled 16.5p to 42.5p after the Ukrainian iron ore miner said the Ukrainian central bank had decided to declare the bank that holds more than half its cash insolvent.
Oil and gas company LGO Energy (LON:LGO) spurted 0.02p to 1.32p after telling investors that first half revenues more than doubled to £6.6mln as production in Trinidad increased significantly.
Haydale Graphene Industries (LON:HAYD) ticked up 1.5p to 164p as it won a number of research grants totalling more than £450,000.
MARKET PREVIEW
The FTSE 100 is expected to open the final day of trading week in the red – taking its cue from the US rather than more buoyant Asian markets.
Spread-betting firm IG is predicting the UK blue-chip index will fall around 25 points initially to 6,161.99.
The big news on US interest rates had investors, traders, analysts and economists shrugging and asking, ‘what was that all about?’
The base borrowing rate was left on hold after weeks of will-they-won’t they? speculation ahead of the Federal Open Markets Committee meeting Thursday.
And there appears to have been a degree of unanimity on the subject with only one dissenter.
So the tea-leaf readers will shift their attention to next month. CMC Markets’ commentator Michael Hewson reckons we won’t see any movement from the Fed until December at the earliest.
The ‘downbeat tone’ on the US economy appear to have caught the markets out, though US indices zig-zagged as the attempted to decode the Fed’s message.
The Dow ended the day off 0.4% as did the tech-heavy NASDAQ, while the broader-based S&P 500 fell 0.25%.
In Asia, the Fed’s inaction appears to have perked the markets, with the Shanghai Composite up 0.56% and the Hang Seng in Hong Kong ahead 0.47%. The Nikkei was the outlier as it fell 1.6% amid continuing worries over exports.
Overall, the feeling in the region is the Fed’s move is actually supportive of international equity markets.
“If you’re overweight equities, you probably say: the Fed’s not going to harm us. It’s quite possible that this gets pushed out further and further, into next year,” Shane Oliver, global strategist at AMP Capital Investors, told the Bloomberg financial newswire.
UK Business Headlines
According to the Financial Times insurance group Phoenix has confirmed it is looking at a potential acquisition of its rival, Guardian Financial Services, the private equity-owned “zombie” life assurer.
The Times, meanwhile, has a corker of an angle on the putative takeover of SABMiller, revealing that top executives of the brewer could earn US$1.8bn from the deal. I’ll repeat that – US$1.8bn.
The Times also reckons Rio Tinto is close to agreeing a $4.2bn loan package to construct its huge Oyu Tolgoi underground mine in Mongolia, which was held up by three years of wrangling with the government.
Sticking with mining, that paper said Glencore shareholders have accused the mining group of a “serious breach” of principle in the way it conducted its recent $2.5bn equity placing.
One of the Telegraph’s lead stories emanates from the comments of HSBC’s chairman Douglas Flint, which suggest the bank could retain its domicile in the UK, as his bank mulls moving its headquarters back to Asia.