London midday: Markets drop ahead of key US data

5th Jun 2013 11:18

It was another volatile morning for financial markets on Wednesday as ongoing worries about stimulus measures in the US and a heavy economic data schedule dominated market sentiment. The FTSE 100 hit intraday low of 6,453 this morning, the index's lowest level since the start of May.Concerns about the Federal Reserve scaling back stimulus prematurely had eased this week after a worse-than-expected reading of US factory activity on Monday. However, these worries were reignited yesterday after Esther George, President of the Kansas City Fed, recommended that the Fed should begin to taper quantitative easing soon."History suggests that waiting too long to acknowledge the economy's progress and prepare markets for more-normal policy settings carries no less risk than tightening too soon," she said.Meanwhile, Japanese markets were volatile overnight and were trading firmly lower into the close as investors gave a cool reaction to Prime Minister Shinzo Abe's new plans to boost economic growth. Sentiment was also dampened by a worse-than-expected slowdown in Australian economic growth in the first quarter.Economic data in focusThe focus today is likely to be on data from the States as markets continue to look for indications of how economic figures may influence the Fed's potential 'exit strategy'.All eyes will be on the ADP employment report today, which is usually seen as a rough indicator for what to expect from the official US non-farm payrolls report due out on Friday. Analysts are predicting that the economy added around 170,000 jobs in May. The ISM non-manufacturing PMI is also expected out later this afternoon.Closer to home, the UK service-sector purchasing managers' index (PMI) for the month of May has come in at 54.9, up from 52.9 last month and ahead of the consensus estimate of 53.0. Meanwhile, the final reading of Eurozone composite PMI was unchanged from the preliminary estimate at 47.7.FTSE 100: Tesco disappoints with first-quarter resultsSupermarket group Tesco saw shares fall this morning as like-for-like (LFL) sales across the board continued to slip in the first quarter, with its UK and international businesses suffering from the ongoing squeeze on consumer spending. Headline group sales were up 2.7% but down 2.2% on a LFL basis.AB Foods and National Grid were also in the red after going ex-dividend this morning, meaning that new investors won't be able to receive the companies' latest payouts. Analysts said that National Grid was also being weighed down by reports about infrastructural issues, meaning that a key power cable has had to operate at 50% capacity.Mining stocks were providing a drag today with Anglo American, Fresnillo and BHP Billiton registering moderate losses. Financial stocks including Aberdeen Asset Management, Schroders and Old Mutual were also out of favour.Aberdeen declined after UBS removed the stock from its 'Key Call' list on valuation grounds as well as less scope for surprise on revenue margin accretion and operating margins. Meanwhile, the company announced yesterday afternoon that its Chief Investment Officer had sold nearly 1.4m shares in the company over the last week.Plumbing and heating products group Wolseley was the only riser by lunchtime, rebounding after some heavy falls the day before on the back of a disappointing third-quarter update. The stock was given a lift this morning by Morgan Stanley which upped its recommendation to 'equal weight'.FTSE 250: Man Group tumbles after downgradeHedge-fund manager Man Group dropped sharply after UBS downgraded the stock to 'neutral' after a "degradation in the investment case". The broker said Man remains highly dependent on its AHL fund, while raising concerns about Japanese risk appetite following the recent bout of market volatility.A 6.9% fall in full-year revenue at European plastic packaging group RPC wasn't enough to deter investors today with shares rising strongly from the off. The firm said it was a "robust performance in a challenging economic environment". The firm raised its total dividend per share from 14.4p to 14.9p.DS Smith, the paper and plastic packaging group, was under the weather this morning after Goldman Sachs downgraded the stock to 'neutral', saying that the share price has "limited upside" following a strong period of outperformance.Among the fallers early on were Daily Mail & General Trust, Debenhams, Grainger and Bank of Georgia after going ex-dividend.FTSE 100 - RisersWolseley (WOS) 3,162.00p +0.54%FTSE 100 - FallersAberdeen Asset Management (ADN) 437.60p -5.67%National Grid (NG.) 754.00p -4.62%Tesco (TSCO) 349.85p -4.01%Anglo American (AAL) 1,464.50p -3.56%Schroders (SDR) 2,288.00p -3.21%Fresnillo (FRES) 1,130.00p -3.00%BHP Billiton (BLT) 1,838.00p -2.98%WPP (WPP) 1,088.00p -2.86%Standard Life (SL.) 380.80p -2.83%Wood Group (John) (WG.) 831.00p -2.81%FTSE 250 - RisersRPC Group (RPC) 424.90p +6.33%Thomas Cook Group (TCG) 130.90p +6.11%Homeserve (HSV) 276.80p +5.25%New World Resources A Shares (NWR) 104.90p +3.86%Synergy Health (SYR) 1,100.00p +2.71%Moneysupermarket.com Group (MONY) 212.00p +2.07%PayPoint (PAY) 987.50p +1.80%BH Global Ltd. USD Shares (BHGU) 12.15 +1.33%BH Macro Ltd. EUR Shares (BHME) € 22.55 +1.12%FirstGroup (FGP) 121.70p +1.08%FTSE 250 - FallersMan Group (EMG) 99.90p -14.25%Henderson Group (HGG) 160.10p -4.47%Genus (GNS) 1,324.00p -3.92%Synthomer (SYNT) 190.00p -3.80%Senior (SNR) 265.00p -3.64%Mondi (MNDI) 828.50p -3.61%Balfour Beatty (BBY) 220.00p -3.55%Investec (INVP) 449.40p -3.35%Salamander Energy (SMDR) 165.10p -3.34%Afren (AFR) 129.40p -3.22%