London close: Investors reconnect with reality

13th Jun 2013 17:44

Uncertainty regarding central-bank stimulus, reductions in global growth forecasts by the World Bank and the surprise departure of the head of one of the UK's biggest domestic banks prompted a sell-off on the FTSE 100 on Thursday, as volatility continued on markets across the globe.London's benchmark index slumped to an intraday low of 6,206 in morning trade - towards technical support at its 200 day moving average - a level not seen since late January, as the sharp decline in recent weeks pared the year-to-date rise in the Footsie to less than 6.0% - before bouncing back. The catalyst was the release of a small spate of better than expected economic indicators Stateside, which come ahead of next week's Fed meeting. Continuing concerns regarding the Federal Reserve's 'exit strategy' from stimulus and an underwhelming policy statement from the Bank of Japan (BoJ) have weighed heavily on markets this week. For some very well qualified observers however this is all just part and parcel of a re-adjustment - albeit a painful one - to normalcy in capital markets in general.In parallel, some market observers have called attention today to the recent rise in 'real' or inflation-adjusted Treasury yields in the US, as the improved expectations for that economy feed through into the outlook for inflation and monetary policy. Related to the above, an increasing number of top strategists have been recommending to clients that they switch into US equities from corporate debt. Nevertheless, the volatility in markets, such as the broad sell-off seen overnight in Asian equities, has clearly ruffled quite a few investors' feathers and hopefully there is not something more dangerous amiss, comment analysts at Digital Look. Perhaps in that same vein, over at the FT Alphaville, this is what they were saying today about the ongoing 'adjustment': "it represents the market's reconnection with disinflationary reality. The smoke and mirrors are fading. What is worrying, however, is that a move of this size has been prompted by simple talk of tapering. If that's what tapering does, what will the first hint of a proper QE exit inspire?"Dampening sentiment further was the World Bank which yesterday cut its forecast for global economic growth to 2.2% in 2013, down from its initial 2.4% estimate in January. Meanwhile, the bank said it now expects China to grow by just 7.7% this year, down from its previous 8.4% prediction.FTSE 100: RBS drops after Hester's surprise exitAs expected, RBS tanked after announcing late last night that Stephen Hester will step down as CEO after five years. The boss, praised widely for his work for turning the bank around following its government bailout in 2008, said he was stepping aside as the lender prepares for a re-privatisation. RBS also announced plans to cut up to 2,000 investment-banking jobs as part of its ongoing restructuring. Sector peers Barclays, Lloyds, HSBC and Standard Chartered were also in the red.Other financials were also out of favour, including Aberdeen Asset Management, Old Mutual, Legal & General, Resolution, Hargreaves Lansdown and Standard Life. FTSE 250: Home Retail drops sharplyHomebase and Argos owner Home Retail slumped as both chains suffered a decline in margins in the first quarter. Nevertheless, CEO Terry Duddy said that overall the group's trading has been consistent with the board's expectations.Retail WH Smith fell after saying that sales in the third quarter were down 5.0%, while like-for-like sales fell by 6.0%.WS Atkins, the engineering and product management consultancy, said that a strong performance in the UK was offset by continued challenging markets elsewhere as it posted flat revenues for the year ended March 31st. However the bottom line did come in ahead of market expectations, helping shares to rise this morning.FTSE 100 - RisersEvraz (EVR) 119.50p +5.10%Eurasian Natural Resources Corp. (ENRC) 240.70p +3.17%Vedanta Resources (VED) 1,185.00p +3.13%Petrofac Ltd. (PFC) 1,297.00p +2.85%Rio Tinto (RIO) 2,759.50p +2.58%International Consolidated Airlines Group SA (CDI) (IAG) 260.30p +2.16%easyJet (EZJ) 1,238.00p +1.98%Aggreko (AGK) 1,684.00p +1.94%Anglo American (AAL) 1,400.00p +1.86%Glencore Xstrata (GLEN) 306.10p +1.85%FTSE 100 - FallersRoyal Bank of Scotland Group (RBS) 315.00p -3.26%Experian (EXPN) 1,140.00p -2.40%Rolls-Royce Holdings (RR.) 1,167.00p -1.93%Aberdeen Asset Management (ADN) 396.00p -1.61%Vodafone Group (VOD) 178.70p -1.27%Capita (CPI) 943.50p -1.26%Resolution Ltd. (RSL) 276.10p -1.22%Randgold Resources Ltd. (RRS) 4,759.00p -1.16%Rexam (REX) 495.30p -0.88%Intertek Group (ITRK) 3,057.00p -0.84%FTSE 250 - RisersPZ Cussons (PZC) 379.20p +3.78%Atkins (WS) (ATK) 912.50p +3.69%Britvic (BVIC) 490.00p +2.94%Kentz Corporation Ltd. (KENZ) 374.70p +2.69%Kazakhmys (KAZ) 297.80p +2.65%PayPoint (PAY) 1,000.00p +2.62%Catlin Group Ltd. (CGL) 467.20p +2.12%Petra Diamonds Ltd.(DI) (PDL) 119.70p +1.79%AZ Electronic Materials SA (DI) (AZEM) 312.40p +1.76%Hays (HAS) 88.15p +1.73%FTSE 250 - FallersNew World Resources A Shares (NWR) 86.50p -13.02%Home Retail Group (HOME) 131.10p -9.02%Rank Group (RNK) 150.00p -6.25%Computacenter (CCC) 449.90p -3.85%Alent (ALNT) 341.50p -3.83%888 Holdings (888) 141.60p -3.74%Worldwide Healthcare Trust (WWH) 1,005.00p -3.64%Bodycote (BOY) 507.50p -3.61%Unite Group (UTG) 335.10p -3.57%Informa (INF) 469.50p -3.08%FTSE TechMARK - RisersConsort Medical (CSRT) 778.00p +4.99%Optos (OPTS) 122.25p +4.04%Ark Therapeutics Group (AKT) 0.43p +3.57%Emblaze Ltd. (BLZ) 49.75p +1.53%XP Power Ltd. (DI) (XPP) 1,210.00p +1.09%E2V Technologies (E2V) 118.00p +0.96%Gresham Computing (GHT) 81.50p +0.62%Antisoma (ASM) 1.71p +0.29%Innovation Group (TIG) 27.50p 0.00%Triad Group (TRD) 6.50p 0.00%FTSE TechMARK - FallersBATM Advanced Communications Ltd. (BVC) 14.75p -7.81%Promethean World (PRW) 14.12p -4.24%RM (RM.) 69.50p -3.47%DRS Data & Research Services (DRS) 20.50p -2.38%Wolfson Microelectronics (WLF) 164.25p -2.23%Vislink (VLK) 29.50p -2.07%Parity Group (PTY) 29.25p -1.68%Ricardo (RCDO) 398.25p -1.67%Microgen (MCGN) 151.50p -1.62%Oxford Biomedica (OXB) 1.70p -1.45%AB