FTSE 100 watch: Footsie pauses after Fed-inspired rally

on Dec 20, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Friday, December 20: The FTSE 100 index has been little changed today following yesterday’s rally fuelled by the US Federal Reserve’s decision to start scaling back its monetary stimulus while keeping interest rates near zero.

Among individual stocks, shares in BAE Systems (LON:BA) plunged nearly five percent so far today, dragged down by the news that the United Arab Emirates (UAE) had decided not to proceed with a deal to buy BAE’s Eurofighter Typhoon aircraft.
**Footsie little changed after rally**
As of 12:06 UTC, Britain’s blue-chip index had added 3.13 points to be 0.05 percent up at 6,587.83 after having closed at a two-week high of 6,584.70 yesterday. The index is on track for a gain this week after the Fed said that it would start winding down its monetary stimulus, signalling confidence in the recovery of the world’s largest economy.

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Today, the Footsie has also been impacted by the expiry of December options. Reuters quoted traders as reporting that banks were offloading long FTSE 100 positions which they had been holding as a hedge against the ‘put’ options they had written on the index, and which have now expired.
“If you had a hedge on, you would basically be taking it off… so I am sure there is a lot of open interest there and that’s why it gapped down to that level,” Nick Xanders, strategist at BTIG, told Reuters.

**FTSE 100 winners and losers**
The standout Footsie loser has been BAE Systems, whose shares tumbled after the company said that the UAE had quit negotiations to buy the Eurofighter Typhoon aircraft. (BAE share price tumbles on double blow from the Middle East) As of 12:55 UTC, BAE’s share price had lost 4.86 percent to 420.50p.

Utilities have also been sold off, with Severn Trent (LON:SVT), United Utilities (LON:UU), National Grid (LON:NG) and SSE (LON:SSE) all posting declines. Severn Trent’s share price has shed 1.68 percent so far today, while United Utilities’ share price has edged 0.15 percent lower to 654.00p. National Grid’s share price is currently 0.42 percent down at 784.21p and SSE’s share price stands at 1,357.88p or 1.03 percent lower.

The top Footsie winner has been Carnival (LON:CCL) whose shares surged after the cruise operator posted better-than-expected full-year results. (Carnival share price climbs on better-than-expected results)
“We like the business of Carnival and see potential upside from a brand recovery,” Atif Latif, director of trading at Guardian Stockbrokers, told Reuters. Carnival’s share price is currently 4.89 percent up at 2,425.00p.
London-listed retailers have been in demand, with Tesco (LON:TSCO) and Marks and Spencer (LON:MKS) seeing some of the biggest gains in the sector. Tesco’s share price has added 2.13 percent to 330.75p while Marks and Spencer’s share price is 0.95 percent up at 448.40p.
**The FTSE 100 was 0.17 percent up at 6,596.11 points as of 13:10 UTC on 20 December 2013.**
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