Goldman Sachs earnings trigger equity sell off – FTSE back below 6000 again
City Index January 19, 2011 4:08 PM
<p>A surprising decline in earnings from major US bank and corporate bellwether Goldman Sachs triggered investors into defensive mode in late European trading, forcing the […]</p>
A surprising decline in earnings from major US bank and corporate bellwether Goldman Sachs triggered investors into defensive mode in late European trading, forcing the FTSE 100 lower by over 1% and back below the 6000 level.
The 53% decline in profits from Goldman Sachs took investors by a bit of a surprise. it It was the amount of decline, rather than the difficulty in their fixed income trading departments, which had been expected, that took the market by a bit of a surprise. and as As a result, investors threw caution to the wind. The earnings from Goldman Sachs, typically seen by most as one of the pinnacle investment banks in the world, has hurt investor sentiment today, particularly those hoping for a strong set of earnings from UK banks like Barclays, whose shares subsequently bore the brunt of the reactive selling.
Despite the strong start to the year’s trading, the FTSE 100 is firmly stuck in a trading range of 5940-6090. There is clearly a battle going on between those investors who still see further upside and are prepared to use any sell off as buying opportunities and those investors who feel market prices are overstretched and warrant a correction. Right now, neither side is winning and the market remains locked in a range as a result.
To sound a word of caution, the Volatility Index, investor’s’ key gauge of fear or pessimism in the market, has nudged higher by 4% today, rallying from levels where the Iindex has historically found support. This could be an early warning sign to an increase in volatility ahead, which could prove troublesome for the markets if bearish technical indicators are proved correct.
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