London close: FTSE 100 drops three per cent after Fed signals end to QE

20th Jun 2013 16:58

Equity, bond and commodity markets were a sea of red on Thursday as traders fled from risk in the aftermath of the Federal Reserve's confirmation of its stimulus 'exit strategy'.The FTSE 100 finished down an eye-watering 189 points, falling 2.98% to 6,160. The last time the index was at this level was back in mid-January.The Fed last night signalled that it would begin to taper its $85bn-a-month quantitative easing (QE) programme this year and bring it to a complete halt in 2014 if the recovery continues to pick up. QE, a stimulus programme which has flooded financial markets with liquidity for nearly five years, would end when the US jobless rate reaches around 7.0%, Fed Chairman Ben Bernanke said last night, adding that downside risks to the economic outlook have "diminished".Unsurprisingly, typically 'riskier' stocks such as miners and financials felt the heat today in London as investors sought out safe-haven assets. Meanwhile stocks on Wall Street, which had already fallen sharply late last night after Bernanke's press conference, were registering steep falls again after the opening bell in New York.Major commodities also experienced a sell-off today with demand concerns compounded by some gloomy data from China this morning which continues to indicate a slowdown in the world's second-largest economy. The preliminary HSBC China manufacturing purchasing managers' index (PMI) dropped to a nine-month low of 48.3 in June, missing the consensus estimate of 49.1. Shavaz Dhalla, a Financial Trader at Spreadex, said this afternoon that the falls on stock markets over recent weeks clearly haven't been severe enough to encourage bargain-hunters back in."In fact, the last thing investors are focusing on at the moment is whether they should be taking on any more risk. More than likely, the same investors are probably wondering whether holding equities at the moment, in the context of officials relinquishing stimulus measures, is actually a smart idea."FTSE 100: Miners hit hardest in market sell-offAs is often the case in a broad market sell-off, mining stocks bore the brunt of the slump in risk appetite, tracking the large declines in commodity prices. Precious metal peers Polymetal, Randgold and Fresnillo were among the worst performing after gold prices dropped to their lowest level since September 2010. Rio Tinto and BHP Billiton were also firmly lower.Market volatility continues to affect Aberdeen Asset Management, another heavy faller today, while high-yielding insurance peers Prudential and Old Mutual dropped as bond yields across the globe surged.Melrose was lower despite the company announcing the disposal of motor manufacturing division Marelli Motori for £181m, well ahead of Investec's £150m estimate.Not one constituent on the FTSE 100 was in positive territory today, though Lloyds was outperforming the blue-chip index, finishing only slightly lower after saying it is making "significant progress in further strengthening its capital position" without the need to fundraise. This came after the Prudential Regulation Authority (PRA) found that Lloyds accounted for £8.6bn of the £27.1bn capital shortfall in the UK banking sector by the end of 2012.RBS however dropped sharply after the PRA said it capital deficit was £13.6bn, over half of the total.FTSE 250: Ted Baker jumps after impressive first quarterBritish fashion group Ted Baker soared today after a better-than-expected first quarter in which retail sales grew by 30.7%, more than double the rate of growth some analysts had expected.Equipment rental firm Ashtead also rose after reporting a record year for profits, bolstered by revenue growth, operational efficiency and lower financing costs.Leading the downside were unsurprisingly the miners, though losses were more pronounced than on the top-tier index. Coke and coal miner New World Resources continued its recent descent, dropping by 18%, extending its year-to-date fall to a whopping 81%. Sector peers Petropavlovsk, Lonmin and Kazakhmys also finished with heavy losses.FTSE 100 - RisersFTSE 100 - FallersPolymetal International (POLY) 541.00p -11.96%Fresnillo (FRES) 960.50p -8.09%Aberdeen Asset Management (ADN) 368.50p -7.88%Randgold Resources Ltd. (RRS) 4,296.00p -7.49%Antofagasta (ANTO) 824.50p -5.18%Royal Bank of Scotland Group (RBS) 303.70p -4.95%SABMiller (SAB) 3,113.50p -4.93%Old Mutual (OML) 177.10p -4.89%Glencore Xstrata (GLEN) 292.70p -4.75%BHP Billiton (BLT) 1,728.50p -4.61%FTSE 250 - RisersTed Baker (TED) 1,700.00p +15.65%Ashtead Group (AHT) 658.50p +5.02%Tullett Prebon (TLPR) 305.00p +4.27%Moneysupermarket.com Group (MONY) 190.00p +3.49%888 Holdings (888) 149.80p +1.22%Chemring Group (CHG) 277.00p +0.91%Electra Private Equity (ELTA) 2,283.00p +0.79%United Drug (UDG) 314.50p +0.48%BH Macro Ltd. USD Shares (BHMU) 21.2 +0.47%John Laing Infrastructure Fund Ltd (JLIF) 116.80p +0.43%FTSE 250 - FallersNew World Resources A Shares (NWR) 65.60p -18.00%Man Group (EMG) 78.65p -10.01%Petropavlovsk (POG) 130.10p -9.65%Ashmore Group (ASHM) 325.00p -9.14%PZ Cussons (PZC) 344.10p -7.72%Lonmin (LMI) 270.20p -7.28%International Personal Finance (IPF) 480.40p -6.26%Persimmon (PSN) 1,148.00p -6.21%Kazakhmys (KAZ) 273.20p -6.18%NMC Health (NMC) 286.40p -5.94%