London Report: Lloyds PPI news leads the FTSE to six-week low
BRITAIN’S top shares extended a recent slide yesterday, slipping firmly into negative territory after disappointing US data, with Lloyds leading banks lower after its latest update.
The FTSE 100 was down 44.78 points at 6,465.66 by the close, a fall of 0.7 per cent, dropping to new six-week lows after last week’s 2.3 per cent decline.
The index turned negative after a sharp miss on the US ISM manufacturing data raised doubts over the strength of the US economic recovery, ahead of jobs data later in the week.
“There’s been a shift in sentiment in the market, and there’s no doubt that people are a lot more wary of figures coming out,” said Toby Morris of CMC Markets, said.
The index dropped heading into the close in a technically bearish move, falling below 6,470, seen by technical analyst Philippe Delabarre at Trading Central as a key support level if the index was to stay in its uptrend since the summer.
Over the last fortnight, the index has lost 5.3 per cent on concerns over emerging markets. Unease about slowing Chinese growth and the withdrawal of US monetary stimulus spread from emerging market currencies to the world’s big stock markets, resulting in a 3.5 per cent drop for the FTSE in January.
Financials – a broad based sector which includes banks, asset managers and insurers – trimmed 21.5 points off the index, accounting for nearly half of the index’s fall.
Lloyds fell four per cent after it said it had set aside a further £1.8bn in the fourth quarter to compensate customers mis-sold payment protection insurance (PPI), and dividend payouts were to come later than expected.
“With people getting excited about a dividend coming soon, the fact it has been put back removes the reason to own those shares in the short-term,” Zeg Choudhry, head of equities trading at Northland Capital, said.
Alongside the emerging market worries, investor concern has focused on the current earnings season, and whether it will result in profits strong enough to justify lofty valuations after a bumper 2013.
Of the 17 per cent of European companies to have reported so far, 44 percent have missed profits expectations, while 46 per cent have missed expectations on revenue, Thomson Reuters Starmine data shows.
However, Randgold shares rose 6.2 per cent after posting record production in 2013.