London close: FTSE 100 down one per cent as volatility continues

11th Jun 2013 16:41

Rising government bond yields, falling commodity prices and an underwhelming statement from the Bank of Japan (BoJ) saw some heavy falls on equity markets on Tuesday.The FTSE 100 closed down 60 points at 6,340, but finished well off its intraday low of 6,283 as US bond yields pared earlier gains. 10-year US Treasury yields are now trading around their highest levels since April 2012 as speculation increases that the Federal Reserve will soon begin to tighten monetary policy as the economic recovery gathers momentum.Overnight, there were no surprises at the BoJ's monetary policy meeting with the central bank leaving its aggressive easing plan in place. Following on from yesterday's upwards revision to first-quarter economic growth, the BoJ said that the economy "has been picking up"."Investors are clearly troubled with the announcement as it was hoped that more stimulus measures would help calm Japan's bond markets which are in turmoil over the confusion regarding the longevity of the nation's stimulus measures," said Financial Trader Shavaz Dhalla from Spreadex.Investors were also focusing on the European Central Bank (ECB) today as it was expected to defend its Outright Monetary Transactions programme in a two-day hearing in the German constitutional court. Plaintiffs argue that the ECB is acting outside European laws that prohibit government financing via the central bank.The Footsie, which finished down nearly 1.0% today at 6,340, has now fallen by around 7.0% since hitting a 13-year closing high of 6,840 on May 22nd. Brenda Kelly, Senior Market Strategist at IG, told Sharecast that remaining above the "big granddaddy" 200-day moving average (DMA) - currently at just above 6,200 - is "important if we are to retain any bias to the upside"."Now that the 50- and 100-DMAs have given way, this area might well be an attractive target and one could expect to see support at this level," she said.The Debt Management Office today sold 10 year Gilts, obtaining bids worth 1.52 times the amount on offer, down from a ratio 1.68 on April 9th. Yields on the same rose to a four month high, hitting an intra-day high of 2.24%.FTSE 100: Aberdeen bears the brunt of market volatilityFinancial and mining stocks bore the brunt of the sell-off on equity indices on Tuesday with Aberdeen Asset Management among the worst performance as it continued to be hit by the wider market volatility, particularly due to the company's large exposure to the emerging markets. Matt Basi, the Head of UK Sales Trading at CMC Markets, said that "equity-price weakness is magnified in the fund manager and the stock continues its steep descent from the recent highs". Other financials, including Old Mutual and Prudential, were also falling heavily with analysts citing their high-dividend characteristics which tend to become less attractive when government bond yields rise. Meanwhile, Lloyds was down after The Times said that contractors at the bank's PPI complaint handling unit were "taught how to play the system to the detriment of clients". Part-nationalised peer RBS was also lower.Mining stocks were also weighing heavily on the FTSE 100 today as metals prices fell across the board. Fresnillo, Anglo American and Glencore Xstrata were registering steep losses. Russian mining peers Polymetal and EVRAZ were making headlines on the news that they will be exiting the FTSE 100 index this week following some sharp falls so far this year.Shares in airline IAG sank by the close after the company said that the combined deficit of British Airways' two main pension schemes was estimated to be £3.3bn on March 31st, slightly higher than the £3.2bn deficit at March 31st 2010. The company said it would maintain its contributions to pay down the deficits.FTSE 250: Ocado continues to rise as rumours escalateOnline grocer Ocado was extending its recent gains on Tuesday, continuing to set new all-time highs. The Daily Mail today reported rumours that department store Marks & Spencer could "gatecrash the online grocer's cosy joint venture deal with Morrison". FastFT also mentioned the possibility of a takeover, given that the company now has two high-profile partners in Morrison and Waitrose. Meanwhile, market chatter continues to suggest that recent gains simply reflect traders covering short positions. Lighting, signalling and electronics group Dialight dropped sharply after saying that first-half profits would be adversely affected by weaker sales in the Signal segment and additional costs from the planned extra sales in the Lighting segment. AG Barr and Britvic were both in the red despite the Competition Commission provisionally clearing their proposed merger, as the Chairman of Britvic said that the company is now in a "different place" to last summer when they first agreed to a tie-up. He hinted that the terms may have to be renegotiated once the watchdog presents its final report next month. FTSE 100 - RisersRoyal Dutch Shell 'B' (RDSB) 2,210.00p +0.75%Rolls-Royce Holdings (RR.) 1,187.00p +0.51%Royal Dutch Shell 'A' (RDSA) 2,127.50p +0.50%Tullow Oil (TLW) 1,017.00p +0.49%Reed Elsevier (REL) 746.50p +0.47%Imperial Tobacco Group (IMT) 2,365.00p +0.42%BG Group (BG.) 1,173.00p +0.26%easyJet (EZJ) 1,229.00p +0.24%Vodafone Group (VOD) 192.00p +0.13%Serco Group (SRP) 591.00p +0.08%FTSE 100 - FallersEvraz (EVR) 117.30p -5.86%Burberry Group (BRBY) 1,358.00p -4.84%Aberdeen Asset Management (ADN) 395.80p -4.42%Polymetal International (POLY) 617.00p -4.19%Schroders (SDR) 2,159.00p -3.96%Old Mutual (OML) 184.50p -3.96%International Consolidated Airlines Group SA (CDI) (IAG) 257.00p -3.78%Fresnillo (FRES) 1,076.00p -3.76%Glencore Xstrata (GLEN) 302.50p -3.75%Prudential (PRU) 1,055.00p -3.74%FTSE 250 - RisersOcado Group (OCDO) 325.00p +4.17%Workspace Group (WKP) 394.50p +3.00%Keller Group (KLR) 925.00p +2.10%Euromoney Institutional Investor (ERM) 951.00p +1.71%Bovis Homes Group (BVS) 776.50p +1.70%Alent (ALNT) 360.60p +1.58%Supergroup (SGP) 675.00p +1.50%IP Group (IPO) 140.70p +1.44%Jardine Lloyd Thompson Group (JLT) 898.00p +1.01%Cranswick (CWK) 1,121.00p +0.90%FTSE 250 - FallersDialight (DIA) 1,157.00p -13.53%Daejan Holdings (DJAN) 3,450.00p -8.73%Oxford Instruments (OXIG) 1,455.00p -7.15%Man Group (EMG) 86.25p -7.11%Intermediate Capital Group (ICP) 430.20p -5.24%Hays (HAS) 83.90p -5.09%Centamin (DI) (CEY) 36.01p -5.06%Imagination Technologies Group (IMG) 317.90p -5.02%Ferrexpo (FXPO) 143.00p -4.98%Kazakhmys (KAZ) 300.80p -4.81%