FTSE falls 0.5% on bank weakness and profit taking
City Index June 22, 2011 3:04 PM
<p>The FTSE 100 fell 0.5% on Wednesday, weighed down by weakness in the UK banking sector, which slumped 1.3% to trade below support levels of 4300 once […]</p>
The FTSE 100 fell 0.5% on Wednesday, weighed down by weakness in the UK banking sector, which slumped 1.3% to trade below support levels of 4300 once again.
The focus has quickly shifted towards next week’s vote on the austerity plan required to convince the EU to sanction the next €12 billion worth of loans and proceed with a second bailout to help Greece, saddled with over €350 billion worth of debt, to meet its liabilities over the next few years. One would hope that having come through the uncertainty of a no confidence vote, Greek PM Mr Papandreou is likely to garner enough support to help pass his new austerity plan. However with the situation still highly fragile, not many investors are likely to take huge risks betting on that just yet.
What we have seen therefore today is a firm example of the ‘buy the rumour, sell the fact’ trade scenario, with yesterday’s optimism lifting sentiment and encouraging short term equity buys, and now with the vote coming through as expected, many have been quick to lock in their gains and watch the situation in Greece progress.
The eyes of traders are also firmly on tonight’s FOMC rate decision and subsequent press conference with Ben Bernanke afterwards. The emphasis here will be on any clues as to what the Fed plans to do next in the face of weakened US economic data and stubbornly high unemployment. Debate continues to rage between analysts as to whether the Fed is likely to sanction QE3 or maintain rates at existing low levels for an extended period of time to encourage spending.
From an individual stock mover perspective, Man Group continues to see buyer demand on the back of press speculation that the world’s largest listed hedge fund could be subject to a cash bid. Positive broker comments from Credit Suisse, Goldman Sachs and Citigroup have also supported the company’s share price this morning.
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