London pre-open: Sharp falls expected after Bernanke confirms 'tapering'

20th Jun 2013 07:28

Confirmation by Chairman Ben Bernanke that the Federal Reserve could begin taper its quantitative easing (QE) programme this year is set to weigh heavily on markets on Thursday.City sources predict the FTSE 100 will open down 93 points from yesterday's close of 6,349.Stocks on Wall Street last night were slightly lower as the Federal Open Market Committee maintained its $85bn-a-month of asset purchases, but dropped sharply after Bernanke's press conference. QE, a stimulus programme which has flooded financial markets with liquidity for nearly five years, could come to a complete stop when the US jobless rate reaches around 7.0%, Bernanke said last night. While he assured that policy "is in no way predetermined and will depend on the incoming data and the outlook", he said that "the Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year"."This is about as black and white as it gets with the Fed, which is why we've seen such a sell-off in global equities, while US Treasury yields have gone through the roof and the greenback has rallied aggressively," said Market Analyst Craig Erlam from Alpari."Given that there is only four more meetings this year, only two of which will be followed by a press conference with Bernanke, the consensus is that tapering will begin in September or December," he said. Stocks to watchMelrose Industries has agreed to sell its wholly-owned subsidiary Marelli Motorio, an electric motor and generator manufacturer.The business will be sold to an undisclosed company owned by funds managed by the Carlyle Group for a total cash consideration of €212m.British fashion label Ted Baker delivered an impressive 32.7% rise in revenue for the 20 week period from January 27th to June 15th following strong demand across the group. Retail sales for the period surged 30.7% from the same period last year, while average retail square footage rose by 13.4%.Dixons Retail has unveiled impressive annual results, with continuing progress in cutting costs and driving the top line. Chief Executive Sebastian James said the results, which showed underlying pre-tax profit up 15% to £94.5m in the year to April 30th, marked "an important milestone in our transition from survivor to winner".BC