Fed’s negative outlook takes toll on FTSE

Fresh off allegations that investors were detached from the real world, a big dose of reality from the US central bank knocked around 100 points off the UK’S top market yesterday.

Markets dropped across Europe on the warning but the news did little to dent the US indices.

The FTSE 100 ended the day down 98.64 points to 6,013.34, a drop of 1.6 per cent.

The Fed said on Wednesday that the US economy could be badly hit over a longer term, while it signalled that it could be some time before it raised interest rates again.

CMC Markets analyst David Madden said: “European equity markets are deep in the red on the back of the Fed minutes [on Wednesday] night. The update warned the US economy could face a ‘considerable’ negative impact over the medium term on account of the pandemic. The Fed also repeated the need for fiscal stimulus as they feel they can’t tackle the crisis alone.

“The absence of a coronavirus relief package is playing on traders’ minds even more so in light of the Fed’s comments. It seems a bit strange that traders are all of a sudden worked up about the Fed’s bearish outlook when it has been known for a while now.”

As markets closed in Europe, both the S&P 500 and the Dow Jones were trading flat, despite disappointing US job numbers that came out yesterday.

In company news, Frasers Group’s delayed annual results proved a major boon to shareholders as the company’s value jumped 13.3 per cent at 346.6p. Pre-tax profit was down 13 per cent to £101 million on revenue of nearly £4 billion, up 7 per cent.

Vertu Motors saw an even larger jump in its share price, closing up by 15.6 per cent at 25.2p after making record profits from its used car sales in July.

Fellow car dealership Lookers had its own revelations, forced to delay its annual results for a second time, extend a probe into potential fraud in its previous accounts and warn of a “material” loss in the first half of the year. Its shares have been suspended since the start of January.

The biggest risers on the FTSE 100 included Ocado, up 30p to 2,418p, and among the biggest fallers was Standard Life Aberdeen, down 17.7p to 245.6p.