The index of UK blue-chips has been called 45 points lower by the spread-betting firms, which reckon it will open at 6,972.47
Well, it was good while it lasted. After Friday’s triple-digit decline, the FTSE 100 is expected to open the new week below the 7,000-mark with US shift in monetary stance continuing to reverberate through international stock markets.
The worldwide wobble was precipitated by comments on Friday by James Bullard, president of the St Louis Federal Reserve Bank.
Traders are now anticipating rises in interest rates starting late next year, rather 2023 later, while talk has turned to the tapering of the huge support that has allowed stock markets to defy gravity.
The value plays, such as banks, builders and utility firms that are sensitive to the global economic fluctuations, have been hardest hit in the latest bloodletting.
“Federal Reserve official James Bullard became the proverbial bull in a China shop on Friday when he said that the Fed might need to raise rates in late 2022 instead of 2023,” said Jeffrey Halley, market analyst at ONADA.
“That sparked a run for the exit door for equity markets and commodities while the US Dollar powered higher. The US yield curve continued to flatten as long-dated bond yields slumped, notably in the 20-year tenor.
“The major casualty has been the global reflation/cyclical recovery trade. The reaction of markets since the FOMC dot-plotted everybody last week indicates how much cash was in that trade.”
In Asia earlier, Japan was the biggest casualty in the clear-out as the Nikkei 225 dropped 3.6%. Hong Kong’s Hang Seng was off 1.5%, while the Shanghai Composite was barely changed.
Here at home, GlaxoSmithKline’s first-quarter update on Wednesday is eagerly awaited – not for the financial update, but rather for the strategy review that will address some of the criticisms levelled by activist investor Elliott Management.
Also, this week builder Berkeley () delivers finals, while the may add some local context on monetary policy as the ‘s rate-setters meet to decide UK borrowing costs.
Around the markets
- Pound US$1.3799 (flat)
- Bitcoin US$34,104.17 (-4.5%)
- Gold US$1,770.60 (flat)
- Brent crude US$73.69 (+0.2%)
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region fell sharply on Monday with Japan’s Nikkei 225 dipping 4% briefly.
China has kept one-year Loan Prime Rate (LPR) unchanged at 3.85% while the five-year LPR was also held steady at 4.65%.
The Shanghai Composite slipped 0.10% and Hong Kong’s Hang Seng index declined 1.37%
In Japan, the Nikkei 225 slumped 3.53% while South Korea’s Kospi fell 0.92%.
Shares in Australia fell, with the S&P/ASX 200 trading 1.61% lower.
Proactive Australia news:
‘s () shares jumped this morning after tabling positive nerve regeneration results one year on from a study testing its nerve repair candidate on quadriplegic patients.
() (FRA:XL5) has commenced…