FTSE 100 snaps winning streak as investors await Bernanke’s testimony
The FTSE 100 snapped its recent run of gains as investors became more cautious ahead of the Federal Reserve chairman, Ben Bernanke, making his testimony to the United States Congress on Wednesday and Thursday. Investors have been extremely wary in the days before Bernanke has been due to speak since he suggested that the US central bank could begin tapering its $85 billion a month monetary stimulus on May 22nd, if the US economy looks like it can maintain growth without their intervention.
With the majority of the day’s news essentially being ignored in most cases by investors, it was always going to take something relatively big to draw their attention away from the United States. The mining sector was one such example; with yesterday’s gains on the back of the expansion of the Chinese coast mystic product still fresh in the minds, Rio Tinto announced that their first half production of iron ore had broken numerous records. The miners also reaffirmed the emphasis they are currently putting on expanding their operation, which is backed up by the progress being made in their Bingham Canyon and Oyu Tolgoi.
Rio Tinto advanced by 76.5p to close at 2883p. The news also lifted other miners with BHP Billiton adding 24.5p and Anglo American rising by 23.5p, leaving the companies at 1832p and 1324p respectively.
Elsewhere, Standard Chartered slid by 43p after it was announced that borrowing rates on short-term loans in India, one of the banks biggest markets, would be increased. The Indian central bank, the Reserve Bank of India, said that it was taking the drastic move in an effort to stabilise its economy and slow down the steep decline that the rupee has seen recently. Standard Chartered said that the move will have a negative effect on its business, leading its share price lower to 1503.5p.
The DIY supply chain B&Q enjoyed impressive sales throughout the second quarter due to the hot weather. Sales have been substantially up of late as customers flock to their gardens for barbecues and to their stores for gardening tools. The chain’s owner, Kingfisher close, saw its stock price rise to 383.7p, an increase of 4.7p. The gains were underpinned by Deutsche Bank, who predicted that the company will see it best period for more than three years and raised its target price by 35p per share to 360p.
The FTSE 100 closed for the day at 6556.35, registering a decline of 29.76 points — its first of the week. Whatever takes place in the United States over the next couple of sessions will define the markets movements for the rest of the week, perhaps even longer than that if tapering is suggested.
