London’s blue-chips tumbled from five-year highs on worries the US Federal Reserve would bring its stimulus programme to an early end.
The FTSE 100 lost 1.5pc in early trade and the mid-cap FTSE 250 fell by the same amount. Minutes from the latest central bank meeting, released after London closed yesterday, showed the Fed may slow or halt its asset purchases before employment picks up. The news saw US stock markets fall last night.
“The Federal Reserve in the US dropped a bit of a bombshell on investors last night as it became clear from the minutes that they are as split as our own Bank of England, however, whilst the BoE looks like it is set to ramp up quantitative easing, the Fed is already looking ahead to the exit,” said Angus Campbell, head of market analysis at Capital Spreads.
“It wasn’t only the equity markets that saw volatility either as the bond markets saw some sharp moves with traders scrambling for position attempting to work out what the minutes actually meant for the future of the QE program and interest rate in the US.”
Just three blue-chip shares rose in London during early trading. BAE Systems gained 4.2pc on news of a boost to its dividend and share buyback. RSA Insurance edged up 1.3pc after tumbling 14.2pc a day earlier and Rexam put on 0.3pc following encouraging full-year results on Wednesday.
On the mid-cap index, chipmaker CSR shares leapt 13pc after reporting strong fourth quarter numbers and announcing a $ 50m buyback.
Retailer Sports Direct was also among the FTSE 250 risers and climbed 4.8pc. The company said gross profit in the third quarter, which included Christmas, climbed 22.7pc.