London midday: Stocks fall sharply on US concerns

27th Sep 2013 11:19

UK markets were registering heavy losses on Friday morning as investor scaled back risk ahead of the weekend, as concerns over monetary policy and budget talks in the US continued to dampen sentiment."European markets have started the trading day as if it were already the weekend and the lethargy of the equity markets has done nothing to shift this malaise," said Alastair McCaig, Market Analyst at IG.Despite the negative reaction on markets seen this morning, economic data from closer to home came in strongly on Friday with the GfK UK consumer confidence index rising from -13 to -10 in September, its highest level since 2010 and better than the -11 forecast.Over the Europe, the indicator for Eurozone economic sentiment improved from 95.2 to 96.9 (forecast: 96), while confidence in the industrial and services sectors also increased. Consumer confidence was flat at -14 but better than expected (-15).Over in the States, US stock futures are pointing to a weak start as investors await US personal consumption, income and spending figures and the University of Michigan consumer confidence report.'Taper', US budget still in focusTrade has been volatile since last week's decision by the Federal Reserve to hold off from tapering quantitative easing and await a stronger recovery. Conflicting comments by Fed officials since then haven't helped and have worked to cloud the outlook for monetary policy with investors uncertain over when the move will eventually happen.Fed Bank of Richmond President Jeffrey Lacker spoke on Thursday saying that he supported a scaling back of stimulus this month, but said the Fed would find it hard to rein in policy without losing face given that last week's shock announcement hurt the central bank's credibility.Esther George from the Kansas City Fed meanwhile said that initial taper amount may not matter too much; what is more important is the clarity with which the Fed communicates. She said: "What is important [...] is that we will have to be clear, once we start, where we will be going with the end of the programme."Budget negotiations in Washington continue to limit upside on markets with investors nervous ahead of the October 1st deadline, hope that politicians can agree on a extension to the current debt-ceiling limit of $16.7tn to avoid a government shutdown when the new fiscal year begins. According to analyst Mark Zandi from Moody's Analytics, a three-to-four-week shutdown could shave 1.4 percentage points off US economic growth in the fourth quarter. He currently estimates an expansion of 3% without a government closure.Carney sees no need for more QEWeighing on stocks this morning were comments from Mark Carney, the Bank of England Governor, who reportedly said that he sees no reason to continue bond-buying following signs that the UK economy is on the up. According to the Yorkshire Post, he said: "My personal view is, given the recovery has strengthened and broadened, I don't see a case for quantitative easing and I have not supported it." Nevertheless, he said that if the recovery stalls the bank would consider the option of further quantitative easing. In other news, Chancellor George Osborne has called on the Bank of England to play a bigger part in supporting the government's Help to Buy scheme to ensure it does not bring about a property boom. This comes alongside the news that the North-South housing price gap has, for the first time, widened to more than £100,000, according to Nationwide.FTSE 100: SSE, Centrica attempt to reboundUtility peers SSE and Centrica were high risers this morning, rebounding after some sharp falls earlier in the week following Ed Miliband's proposals to freeze energy bills if Labour is voted into power in 2015. Centrica has specifically attacked the plans, saying that it would not be "economically viable" to operate if prices were controlled against a background of rising costs.Babcock, the engineering support services firm, was also gaining after saying that trading in the first half ending September 30th has "remained positive". The company said it "will continue to make further strong progress and that results for the 2013/14 financial year will be in line with its expectations".Meanwhile, building products firm Travis Perkins rose after being lifted from 'neutral' to 'buy' by Goldman Sachs. Distribution group Bunzl also received an upgrade from the US bank from 'sell' to 'neutral' today.Randgold Resources was a heavy faller after Bank of America Merrill Lynch cut its gold-price forecast by 17% to $1,294 an ounce for 2014. Nevertheless, the bank said Randgold remains amount its preferred 'buys' in the sector due to low costs, a rising grade profile and strong balance sheet. TheStreet Ratings, however, cut its rating for the stock from 'buy' to 'hold'.Other miners, including Antofagasta, Vedanta Resources, Rio Tinto, Anglo American and BHP Billiton, were also providing a drag on markets today as metal prices fell. Rio was shrugging off some upbeat comments from Nomura which labelled it as "one of the cheapest stocks" within its peer group.Engineering group IMI also rose after hiring former Weir boss Mark Selway as its new Chief Executive. He will take the reins from company veteran Martin Lamb who will step down at the end of this year after nearly 13 years at the helm. SABMiller, Diageo and Coca-Cola HBC were trading lower this morning after Credit Suisse downgraded the European beverages sector from 'overweight' to 'benchmark', saying it is the "third-most expensive sector in Europe [...] and has the second-worst earnings revisions".FTSE 250: Premier Farnell jumps after UBS commentsShares in Premier Farnell gained strongly on Friday after analysts at UBS said that an acceleration of growth at the electronic components firm should be "around the corner". "Given forward indicators (e.g. PMIs) only improved from around May, with the normal six-month lag we note company growth should start to improve from November and so are unconcerned by the lack of acceleration seen so far," the bank said.Second-tier miners were performing in line with their FTSE 100 peers today as metal prices declined. EVRAZ, Polymetal, Hochschild, Centamin, Petra Diamonds and Kazakhmys were among the worst performers.FTSE 100 - RisersSSE (SSE) 1,483.00p +1.58%Travis Perkins (TPK) 1,667.00p +1.03%IMI (IMI) 1,466.00p +0.89%Centrica (CNA) 370.00p +0.84%Babcock International Group (BAB) 1,203.00p +0.84%Bunzl (BNZL) 1,354.00p +0.74%Aggreko (AGK) 1,601.00p +0.69%Petrofac Ltd. (PFC) 1,408.00p +0.57%BT Group (BT.A) 344.80p +0.50%GKN (GKN) 350.50p +0.37%FTSE 100 - FallersPersimmon (PSN) 1,061.00p -4.33%Antofagasta (ANTO) 819.50p -3.98%Anglo American (AAL) 1,522.50p -2.99%Randgold Resources Ltd. (RRS) 4,427.00p -2.60%SABMiller (SAB) 3,150.50p -2.57%Rio Tinto (RIO) 3,060.00p -2.56%Mondi (MNDI) 1,040.00p -2.44%Vedanta Resources (VED) 1,077.00p -2.36%BHP Billiton (BLT) 1,839.50p -2.31%Old Mutual (OML) 187.10p -1.89%FTSE 250 - RisersPremier Farnell (PFL) 216.30p +2.56%Telecity Group (TCY) 858.00p +2.08%BH Global Ltd. USD Shares (BHGU) 11.83 +1.98%Michael Page International (MPI) 494.30p +1.96%NMC Health (NMC) 329.80p +1.63%Moneysupermarket.com Group (MONY) 145.90p +1.60%Regus (RGU) 183.10p +1.16%Millennium & Copthorne Hotels (MLC) 549.00p +1.10%QinetiQ Group (QQ.) 196.70p +1.08%Dignity (DTY) 1,416.00p +1.07%FTSE 250 - FallersHochschild Mining (HOC) 182.90p -4.69%Evraz (EVR) 128.30p -3.82%Bovis Homes Group (BVS) 704.50p -3.76%Countrywide (CWD) 525.50p -3.49%AZ Electronic Materials SA (DI) (AZEM) 300.50p -3.31%Dairy Crest Group (DCG) 447.60p -3.12%RPC Group (RPC) 451.10p -2.91%Ophir Energy (OPHR) 335.60p -2.87%Bellway (BWY) 1,265.00p -2.84%Polymetal International (POLY) 670.00p -2.83%BC