Fed chairman’s speech sparks FTSE flight
Commodity-linked stocks were the biggest weight on London’s blue chip index as investors waited cautiously for hints on the US central bank’s next policy move after its chairman acknowledged the economy had slowed.
In a speech on Tuesday, Mr Bernanke offered no indication that new stimulus measures were on the cards.
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Hide Ad“People were hoping against hope that QE3 was going to be launched and that now looks very unlikely,” said Martin Dobson, head of trading at Westhouse Securities.
“The US is taking its foot off the gas with regards to stimulus and there’s a fear the economy won’t be able to stand on its own two feet and we’ll head back into recession.”
Those fears prompted a fall in metals and oil prices, as concerns heightened over future demand.
Oil major BP shed 0.7 per cent, dropping away in tandem with crude oil, which was also lower ahead of an OPEC meeting where members are expected to agree to raise global supplies to rein in high prices.
Adding to the gloom, Moody’s credit ratings agency said Britain is at risk of losing its prized triple-A rating if growth remains weak and the government fails to meet its debt-cutting target.