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Stocks tumble on fears ‘lifesupport’ will be withdrawn

Global equities plunged on Wednesday, seeming to gain additional downward momentum as the day unfolded. The consensus view on why the decline occured generally focused on the US Federal Reserve’s March meeting minutes. No gloom was specifically highlighted but asset managers and market commentators spent much of the day discussing that further quantitative easing was not mooted.

Ironically it could be argued that the US economy is indeed motoring along quite nicely and that the Fed feel risk markets and the economy no longer require the aid of QE and can stand on their own two feet.

In the UK every single one of the FTSE 100’s constituents declined, as the blue chip index fell 134.5 points to 5703. The 2.3% decline was the biggest fall in over three months and eroded some previously healthy year-to-date gains.

The FTSE was not alone though, European and US indices following suit, Germany’s Dax falling almost 3% on the day. Gold also fell to a year low, slipping 2% to 1615, whilst Brent Crude Oil offered the prospect of some respite to beleaguered motorists in the forthcoming weeks as it decline 1.5% to $123.

Unsurprisingly government bond yields contracted slightly, the yield on the UK 10 year gilt currently 2.17%, but the rush to ‘quality’ was not quite as heavy as the equity sell off would have inferred.

All this despite relatively comforting government bond auctions in Portugal and Spain, where debt issues and economic uncertainties persist. Indeed, Portugal was able to raise money at its best rates and over the longest term since it received a bailout last spring.

This was posted in Bdaily's Members' News section by John Dance .