FTSE 100 falls in bearish week for investors
City Index November 18, 2011 9:14 PM
<p>The FTSE 100 closed lower by over 1% to finish a rather bearish week that saw the UK index lose 3.3% as investors fled risky […]</p>
The FTSE 100 closed lower by over 1% to finish a rather bearish week that saw the UK index lose 3.3% as investors fled risky asset classes such as stocks as the debt crisis in the eurozone escalated.
Investors in equities have kept a strong eye on debt markets this week, and with Spanish bond yields racing higher and Italian yields swinging in and out of the 7% yield mark for 10-year bonds, this has created tremors in stock markets.
Whilst the ECB continues to show a strong dedication to bring yields on Italian and Spanish bonds under control, far deeper concerns remain over the longer term outlook for the sovereign debt crisis and the potential knock on effect it is likely to have on banks and insurance firms should contagion deepen.
As a result, we have seen a strong move by investors to downsize their holdings in banks and insurance firms this week whilst the debt crisis intensified. The FTSE 350 banking sector lost 6% this week, meaning it has lost a total of 16% in the last three weeks alone, whilst the FTSE 350 insurance sector also lost a hefty 6% in trading this week.
With the eurozone crisis continuing to send tremors into stock markets and with so much at risk right now, investors have shown little motivation to take on huge amounts of risk, leaving very little money at play in the markets and of that money which is at play, most is leaning towards defensive asset classes and stocks such as pharmaceutical or tobacco firms.
Next week will likely see investors continue to trade off the back of headlines out of Europe, whilst an intensive calendar of economic data out in the week will also take focus. Data such as US GDP and FOMC minutes on Tuesday, as well as UK GDP on Thursday will take a big focus and a chance for investors to gauge the strength of the US and UK economic recovery.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.