The selling that rocked global equities post-Fed yesterday continued on Friday, with European indices falling in the early hours of trade.
US stocks faced another choppy session on Thursday as traders grappled with the idea the Federal Reserve will be in no rush to cut rates next year and the pace of rate cuts will be slower than many hoped.
“The post-FOMC yo-yo price action persisted yesterday, as participants continued to digest Powell & Co’s hawkish 25bp cut on Wednesday, though a decent chunk of the market moves seen during the decision itself pared as yesterday progressed,” said Michael Brown Senior Research Strategist at Pepperstone.
“As so often tends to be the case, markets had shifted to a hawkish extreme amid Powell’s remarks, before then gradually edging back from said extreme as the dust settled, and calmer heads prevailed, yesterday.”
The dust was still settling in London on Friday as the FTSE 100 sank another 0.6% in midmorning trade.
“The FTSE 100 was sharply lower again on Friday, dragged down by water utilities and banks after uneven trading in Asia and the US overnight,” said AJ Bell investment director Russ Mould.
“In a sign of risk-off sentiment, cryptocurrency bitcoin slipped below the $100,000 mark.
“A marginal rise in November retail sales was not helped by the fact Black Friday fell outside of the ONS November reporting window this year. Investors in the sector will be hoping there has been a last-minute rush through December as people loosened their purse strings ahead of Christmas.”
The selling was broad, with only around 10 shares trading in positive territory at the time of writing.
Severn Trent and United Utilities were the top fallers after Goldman Sachs slashed their price targets. Severn Trent lost 2.3% and United Utilities dropped 2.6%.
There was mild positivity in retailers Marks & Spencer and Sainsbury’s, but the impact on the index of their gains was a drop in the ocean compared to selling elsewhere.
There is still time for the seasonal rally to kick in, but the FTSE 100 has a long way to go to produce positive returns for the month of December.