FTSE 100 watch: Yellen’s comments hit UK stocks

on Mar 20, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Thursday, March 20: Britain’s blue-chip index has dropped for a second day after the US Federal Reserve’s chair suggested that interest rates could rise earlier than previously expected.

A fall in GlaxoSmithKline Plc’s (LON:GSK) shares has also weighed on the Footsie with the pharma giant reporting that an experimental cancer treatment had failed in a late-stage trial.
**Footsie deep in the red**
As of 12:25 UTC, the FTSE 100 index had lost 69.75 points to be 1.06 percent down at 6,503.38 points. The UK’s benchmark index has tracked global stocks lower after Fed chair Janet Yellen said that the US central bank would probably end its bond-buying programme this autumn, and could start raising interest rates around six months later, sooner than markets had previously expected.

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CNBC quoted Michael Hewson, chief market analyst at CMC Markets, as describing Yellen’s comment as a ‘curve ball’, unsettling markets with her suggestion about the course of interest rates.
“Whether she intended to be taken so literally is open to debate but it was enough to prompt a sharp reversal,” he added.
Hantec Markets analyst Richard Perry told Reuters that if the Footsie dropped below the 6,500 mark, it could then retreat further to last month’s lows of around 6,417 points.

“If that 6,500 level breaks, we’d be looking back to the lows of February,” Perry pointed out.
**Individual movers**

Shares in GSK have declined today after the company said that its experimental lung cancer treatment had not met the first or second endpoints in a Phase III trial. (GSK share price eases as cancer treatment disappoints in late-stage trial) The company however noted that it would continue to test the drug for a third endpoint.

“With a further read-out pending, we are not pinning much hope on the product,” Panmure Gordon analyst Savvas Neophytou said, as quoted by Reuters.
GSK’s share price is currently 1.95 percent down at 1,622.68p.
Insurers have been under pressure for a second day following Chancellor of the Exchequer George Osborne’s 2014 Budget speech with Osborne announcing that pension savers would no longer be required to buy an annuity at retirement. Resolution (LON:RSL) has posted the steepest fall with its shares having lost 4.65 percent to 319.73p so far today.

William Hill (LON:WMH) has also declined, dragged down by yesterday’s announcement of an increase to the tax on fixed-odds betting terminals. (William Hill share price falls on betting-machines tax hike) William Hill’s share price is currently 2.67 percent lower at 342.10p.
Among the few bright spots today has been Next (LON:NXT) which reported annual profit at the top end of its guidance. (Next share price rises as annual earnings meet top end of guidance) Next’s share price is currently 1.62 percent up at 6,686.80p.
SSE Plc (LON:SSE) has been another standout FTSE 100 gainer following an upgrade to ‘overweight’ at Morgan Stanley. SSE’s share price has added 3.34 percent to 1,486.00p so far today.
**The FTSE was 1.04 percent down at 6,504.88 points as of 13:16 UTC on March 20, 2014.**


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