24th Jan 2014 10:48
LONDON (Alliance News) - UK stock indices are continuing to slide Friday, with the FTSE 100 headed for a fourth straight day in the red after suffering heavy losses Thursday amid continued concern about the US and Chinese economies.
With very little of note in the economic calendar to change sentiment Friday and only a few corporate releases, the markets are focused on the future of central bank policy, ahead of a speech at the World Economic Forum in Davos by Bank of England Governor Mark Carney
After starting the day briefly higher, by mid-morning Friday, the FTSE 100 is down 0.6% at 6,734.55. The FTSE 250 is down 1.1% at 15,811.50, while the AIM All-Share is down 0.3% at 867.55.
Major European equity markets also are headed for a fourth day of declines. The French CAC40 is currently down 0.6% and the German DAX down 0.3%.
It is looking increasingly like the markets will have to think again about the timing of an interest rate rise in the UK, as Carney appears to be moving away from his flagship policy.
Having linked a potential interest rate rise to a 7% rate of unemployment back in August 2013, with the introduction of forward guidance, markets have become increasingly expectant of a rate rise as the unemployment rate has fallen toward that level faster than expected, most recently to 7.1%.
On Thursday, Carney told the BBC that the BOE's Monetary Policy Committee will look at "the overall conditions of the labour market" rather than one indicator.
"The big news overnight was Mark Carney?s admission to Jeremy Paxman on BBC?s Newsnight that forward guidance was a dud", said Forex.com Research Director Kathleen Brooks.
The pound is off slightly against the dollar. Having rallied to a 32-month high on Thursday on both interest rate expectations and a weaker dollar, the pound now trades at USD1.6625.
Carney is due to address British business leaders at the speech in Davos at 1205 GMT. Investors will be watch it for further insight to the central bank's future policy.
The only piece of UK economic data out Friday has shown that mortgage approvals increased slightly in December to 46,500, from 45,400 in November. The rise, as recorded by the British Bankers Association, is less than the print of 47,200 that economists had expected.
Precious metal prices have receded slightly from Thursday's spike although remain close to multi-week highs, with gold now trading at USD1,259.90 per ounce, down from a peak of USD1,265.50.
Within UK equities, financial stocks are proving the biggest movers Friday. Aberdeen Asset Management leads the falls on the FTSE 100, down 4.4% after receiving a downgraded to Underweight from Equalweight by Morgan Stanley.
Close Brothers is a gainer in the FTSE 250, however. The investment manager is up 0.5% after releasing an upbeat interim statement.
Royal Mail shares are off slightly after giving a Christmas trading update. Mail volumes declined by 0.7% over the nine months to the end of 2113, the financial effects of which were largely offset by increased pricing.
There is just Canadian CPI data still to come Friday at 1330 GMT. Otherwise investors will be watching for headlines out of Davos in the afternoon.
By Jon Darby; [email protected]; @jondarby100
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Close BrosRMG.LADN.L