An ABSENCE of extra cash from either the Bank of England or the European Central Bank (ECB) disappointed markets hooked on cheap money yesterday.
London’s FTSE 100 continued its slump, down a further 83.2 points or 1.3 per cent at 6,336.11, with the falls triggered by comments from ECB chief Mario Draghi that ruled out unconventional measures such as negative interest rates in the near future.
Ishaq Siddiqi at ETX Capital said: “Market participants are expressing their disappointment over Draghi’s tone at the press conference which sounds like he is not ready to dig deeper into the ECB’s tool box to stimulate the economy.”
Banks were among the biggest fallers after Japan’s Sumitomo Mitsui Banking Corp sold half its stake in Barclays for £260 million, a holding first acquired in the UK bank’s £4.5 billion fundraising just before the financial sector crisis. Barclays was down 4 per cent at 303.3p as brokers suggested that the 308.5p sale price could act as a ceiling for the shares for some time to come.
Other banks were also lower as the move was interpreted as a loss of faith in the sector. Royal Bank of Scotland was down 3.5 per cent at 316.9p.
By far the strongest blue-chip performer was Johnson Matthey, with the chemicals specialist soaring more than 6 per cent on impressive earnings that beat analysts’ expectations. The stock was upgraded by Bank of America as a result of its latest numbers, and added 164p to 2,750p.
Supermarket giant Tesco found some support after the disappointment of its update on Wednesday, as brokers pointed to its attractive price to earnings ratio following recent share weakness. But, Britain’s biggest retailer still closed down 0.8p at 344.8p.
NEW YORK: Wall Street rose last night, with the S&P 500 recovering after hitting a key technical level in volatile trading a day before the release of the US government’s jobs report for May.
The Dow Jones industrial average was up 78.72 points, or 0.53 per cent, to close at 15,039.31 while the Standard & Poor’s 500 Index ended the day up 13.50 points, or 0.84 per cent, at 1,622.40. The Nasdaq Composite Index closed up 22.58 points, or 0.66 per cent, at 3,424.05.