The FTSE 100 is trading lower by more than 40 points this morning after the minutes from the latest US central bank meeting has caused some jitters in global stock markets. The pound is little changed on the day with no large moves of note against its major peers.
Stock prices “quite high”
There were two main takeaways from the release of the minutes of the March Fed meeting that soured sentiment for stocks, with all major European indices trading in the red this morning. Firstly, and the greatest revelation concerning monetary policy, the minutes revealed that most Fed officials back a policy change that would see the $4.5 trillion balance sheet of the central bank reduced later this year. The Fed amassed these assets during its Quantitative Easing programme and has been reinvesting the proceeds upon maturity and a shift away from this would be seen as another step to policy normalisation. This hawkish surprise coupled with comments that some members see stock prices as “quite high” was enough to halt an early rally in US stocks in their tracks and saw more than 200 points erased from the Dow into the close. Overnight some slightly softer than expected Chinese services data has done little to improve sentiment in London and with US president Trump set to begin two days of meetings his Chinese equivalent Xi Jinping today, and the US jobs report tomorrow, it seems probable that the trade in the FTSE will be driven by overseas developments into the weekend.
Pearson (LON:PSON) stock tanks
Shares in publisher Pearson have fallen by almost 9% in early trading after a broker downgrade and the shares going ex-dividend. Exane, a broker that has historically supported the firm, downgraded the company and the stock has now declined more than 36% from last July’s peak. Elsewhere financials are coming under pressure with Aviva (LON:AV), Lloyds (LON:LLOY) and Standard Chartered (LON:STAN) all trading firmly lower on the day. Mining stocks are one of the few bright spots on the blue-chip index with Randgold Resources (LON:RRS), Anglo American (LON:AAL) and Fresnillo (LON:FRES) all sitting on notable gains in excess of 1%. The broader index is holding above some fairly significant technical support around the daily lows and should these levels give way, there could be a sizeable decline in the coming weeks.