FTSE 100 Watch: Footsie Dives Following China PMI and Fed Minutes

on May 23, 2013

After reaching a 13 year-high on Wednesday, the Footsie took a dive in Thursday’s session, declining by 1.74 percent to 6,721.02 as of 12.16 GMT. The sharp fall came after weak manufacturing figures from China prompted a sell-off in Asian markets, which led to a 7.32 percent plunge in the Nikkei 225 to 14,483.98. The bearish sentiment was also fuelled by concerns that the U.S. Federal Reserve might end its bond-buying programme sooner than expected.

By 12.30 GMT only three constituents of the FTSE 100 have seen their share price rise with **United Utilities** leading the winners. The largest publicly traded water company in the UK said fiscal full-year profit has increased by 8.7 percent on the back of higher prices, which have helped offset lower volumes and a shift by customers to meters from fixed rates. United Utilities also said it would distribute a dividend of ₤0.3432 per share.

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**ARM Holdings** led the losers on the Footsie, with the stock falling by 5.49 percent to ₤9.9232 following news that Samsung might use Intel’s Atom processor in its Galaxy Tab 3. An arrival of Intel’s processors into the mobile industry could put an end to ARM’s monopoly on smartphones and tablets. “At the same time, ARM’s chances of breaking into the PC/servers market remain slim and its revenue opportunities are limited,” opined analysts at Exane BNP Paribas.

**easyJet** is trading lower today with the share price down 1.17 percent to ₤12.70 as of 12.44 GMT despite an announcement that Europe’s biggest discount airline has agreed to buy 25 pairs of take-off and landing slots at Gatwick Airport from Flybe Group (easyJet to Buy 25 Gatwick Slots from Flybe for ₤20 Million).
On the macroeconomic front, China’s purchasing managers’ index for the manufacturing sector is set to sink to a seven-month low of 49.6 in May from 50.4 in April, according to a preliminary survey issued by HSBC. The drop is worse than expected and below the 50 midpoint, which separates contraction from expansion.

!m[Plunge in Nikkei 225 Precedes Broad Decline in UK Blue Chips ](/uploads/story/2476/thumbs/pic1_inline.png)
In the U.S. , Fed Chairman Ben Bernanke dissipated fears that the $85 billion (₤56.34 billion) a month bond-buying programme would end soon, only to have these fears rekindled by the release of Fed minutes.
“The release of the latest Fed minutes completely changed that dynamic with a single line, ‘a number of participants express a willingness to reduce QE in June,” CMC Markets UK analyst Michael Hewson said, as quoted by The Guardian. “This is hugely significant because this Fed meeting came before the most recent payrolls data and the huge upward revisions to the numbers that we saw at the beginning of May. If members of the committee felt this way before the huge upward revisions to the jobs numbers, then it stands to reason they probably feel even more inclined now, bringing forward the probability of an even livelier debate about the timing of a slowdown in the current levels of stimulus, when the Fed next meets on 18 and 19 June.”
**The FTSE 100 was at 6,715.41 as of 23.05.2013, 13.00 GMT.**
**The FTSE 100 was at 14,483.98 as of 23.05.2013, 13.00 GMT.**


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