By This Is Money Reporters
17.15 (close): The departure of Sainsbury’s boss Justin King saw shares in the supermarket fall two per cent as the wider blue-chip index also turned red on global economic anxieties.
Mr King, hailed as the saviour who turned around the grocer’s fortunes after taking over when it was on its knees a decade ago, said he will leave in July to be replaced by commercial director Mike Coupe, sending the stock 8.2p lower to 348.5p.
The mood of uncertainty was shared on the wider London market as the FTSE 100 Index endured a rollercoaster day’s trading – gaining at first before dropping heavily and later recovering some losses to end 28 points down at 6544.3.
Lira losses: A move by the Turkish central bank to hike interest rates sharply failed to provide support for its embattled currency
It comes after fears over emerging markets saw falls on Friday and Monday, with a hiatus on Tuesday before the top-flight returned to negative territory.
Early gains had come after Turkey’s decision to hike borrowing rates in order to shore up the value of the lira, but attention soon returned to the United States and the prospect that policymakers would continue to tighten monetary policy.
Markets in France and Germany were also lower while New York’s Dow Jones Industrial Average was in the red too at the close in London.
On currency markets, the pound was flat, at 1.66 against the dollar and 1.21 against the euro.
Mining stocks provided some impetus for the London market after production updates from two leading players in the sector.
Chilean miner Antofagasta jumped six per cent, or 50p, to 872.5p as it reported a record year of copper production in 2013, driven by a strong final quarter.
It was a similar story from Anglo American following higher output in the three month period for iron ore, copper and diamond production. Shares surged nearly six per cent, or 77p to 1420.5p.
Barclays shares were also higher, up 1.6p to 275p, amid reports that chief executive Antony Jenkins was considering branch closures in the UK and the loss of hundreds of investment banking jobs.
The bank later denied that it had plans to announce significant reductions to its branch network though it admitted there would be fewer traditional branches in the future.
Elsewhere, shares in ITV rose 1.1p to 197.7p after it announced the launch of a new pay-TV channel dedicated to drama shows. ITV Encore will be available to Sky subscribers.
Carphone Warehouse set the pace in the FTSE 250 Index after it revealed it will open 60 standalone Samsung stores across the UK and Europe to showcase the technology giant’s mobiles, tablet computers and laptops.
Shares jumped nearly seven per cent or 18p to 287.2p on news of the partnership.
Elsewhere, shares in Mulberry slumped 27 per cent, or 245.5p to 654p, after the handbag maker blamed poor UK sales over the Christmas period for a substantial miss to profits expectations.
The biggest FTSE 100 risers were Antofagasta up 50p to 872.5p, Anglo American up 77p to 1420.5p, Fresnillo up 30.5p to 781.5p and Randgold Resources up 130p to 4235p.
The biggest fallers were William Hill down 10.5p to 330.5p, BSkyB down 22.5p to 844.5p, United Utilities down 18p to 719p and Prudential down 30p to 1244p.
15.05: The Footsie was solidly in reverse in mid-afternoon trading, as US stocks opened sharply lower, with stock markets dropping ahead of the Federal Reserve decision on tapering its bond buying due later today and as the positive effects of a rate hike in Turkey faded.
The FTSE 100 index was down 74.5 points at 6,496.2, swinging around from a similar-sized gain in the morning session and erasing Monday’s rally following a near 300 point slide last week on worries over emerging markets.
The market initially pushed higher after Turkey’s central bank raised interest rates by more than expected to support its under-pressure currency, but the mood turned sour after the hike failed to strengthen the Turkish lira and traders focused on expectations that the Fed will continue to further turn down the taps on its economic stimulus programme.
Fed boss Ben Bernanke is chairing his final FOMC policy meeting today and the committee is expected to sanction a further $ 10billion cut to its monthly bond buying programme to $ 65billion.
In New York, the Dow Jones Industrial Average shouldered a triple-digit fall, shedding 127.0 points to 15,801.6.
Investors also had another mixed batch of earnings to digest, with airplane maker Boeing sharply lower, but Dow Chemicals finding strong gains after results.
Supermarket group Sainsbury’s was a big blue chip casualty in London, losing 8.9p to 347.9p on news its chief executive Justin King is to step down after 10 years in the job to be replaced by commercial director Mike Coupe.
13.00: News Justin King is to step down as Sainsbury’s chief executive in the summer sparked a big sell-off in the supermarket group’s shares today and saw early strong gains by London shares further eroded by lunchtime, although the Footsie stayed positive.
Following on from the emerging markets led wobbles of Friday and Monday, the FTSE 100 Index closed 22 points higher on Tuesday but was only up another 9.8 points at 6,582.1 by midsession, as investors turned shy ahead of the outcome later today of the US Federal Reserve’s latest policy decision meeting.
Markets initially pushed higher as traders welcomed Turkey’s decision to hike borrowing rates in order to shore up the value of the lira, but attention soon returned to the US central bank and the prospect that policymakers will continue to tighten monetary policy by further tapering its equity supportive bond buying programme, one of the fears for emerging markets.
Last post: Ben Bernanke is chairing his last FOMC meeting as he prepares to step down as head of the US central bank
Sainsbury’s shares were 6.75p lower at 349.5p, topping the FTSE 100 fallers board after it the firm said that commercial director Mike Coupe will take on the role held by Mr King for the last decade.
Justin King, whose departure has been rumoured for a while, has been credited with reviving the fortunes of the supermarket and more recently helping it fight off growing pressure on the sector from discount retailers.
Independent retail analyst Nick Bubb said: ‘Despite all the denials about him going, it probably is the best time to step down, as the industry is not getting any easier and the longer he stayed the more the chance that his reputation would start to suffer. I am slightly surprised that the more charismatic John Rogers didn’t get the job, but they’ve played safe and gone for a solid operator in Mike Coupe.’
Among other blue chip casualties, precious metals firm Johnson Matthey shed 28.0p at 3,306p after broker Goldman Sachs downgrading its recommendation on the stock to neutral from buy.
Mining stocks, however, provided the main prop for the London market after production updates from two leading players in the sector.
Chilean miner Antofagasta jumped 50.25p to 872.75p as it reported a record year of copper production in 2013, driven by a strong final quarter.
It was a similar story from Anglo American, up 64.0p to 1,407.5p following higher output in the three month period for iron ore, copper and diamond production.
Barclays shares were also higher, up 3.4p to 276.75p, amid more details of the cost-cutting measures being planned by chief executive Antony Jenkins. He is reported to be considering branch closures in the UK and the loss of hundreds of investment banking jobs.
And Lloyds Banking Group shares were in demand too, ahead 0.5p to 83.3p. The part-taxpayer owned bank has kicked off preparations for a summer 2014 stock market listing of its TSB brand, according to press reports, launching an investor roadshow to build up interest in the business.
Elsewhere, shares in ITV rose 3.5p to 200.1p after it announced the launch of a new pay-TV channel dedicated to drama shows. ITV Encore will be available to Sky subscribers.
Carphone Warehouse set the pace in the FTSE 250 Index after it revealed it will open 60 standalone Samsung stores across the UK and Europe to showcase the technology giant’s mobiles, tablet computers and laptops. Shares jumped 20.5p to 289.7p on news of the partnership.
But elsewhere on the high street, shares in Mulberry slumped 23 per cent, shedding 212.5p to 687p, after the handbag maker blamed poor UK sales over the Christmas period for a substantial miss to profits expectations.
11.10: The FTSE 100 has pared back some of its earlier gains but is still 23.9 points in the black at 6,596.2.
Traders are digesting Turkey’s aggressive rate hike to 12 per cent overnight, a move that has soothed concerns about an emerging markets rout in response to the withdrawal of the US Fed’s stimulus programme.
The Fed is holding its final meeting under chairman Ben Bernanke today and will announce its latest policy decision at 7pm, after the London close. Bernanke’s deputy Janet Yellen takes over the top job at the Fed from February.
Change at the top: Justin King announced he would step down as chief executive of Sainsbury’s this July
Max Cohen, financial sales trader at Spreadex said: ‘Federal Reserve policymakers are set to meet tonight with market participants expecting the central bank to reduce stimulus by a further $ 10billion this month.
‘Whilst the Fed have not confirmed this, economists at this stage believe purchases will be cut by $ 10billion at each of the next six Federal Open Market Committee [FOMC] meetings, with the programme ending no later than December.
‘This comes after the central bank announced its first bout of cuts to stimulus last month amid falling unemployment and improving data.’
Joao Monteiro, analyst at Monex Capital Markets, said: ‘The bulls are very much back in play as global equity markets continue to respond well to news of actions by central banks in emerging markets in shoring up monetary policy.
‘That big hike in Turkish interest rates overnight is being seen as instrumental in giving a little more stability, US corporate earnings continue to paint an increasingly optimistic picture and there’s absolute confidence that the Fed will proceed with its tapering measures when the FOMC shows its hand later in the day.
‘Obviously this does come with the risk that even any signs of caution by the Fed going forward could serve to rock sentiment, but after the selling we saw earlier in the week it does seem to be full steam ahead for equities.’
Jonathan Sudaria, a dealer at Capital Spreads, said: ‘Turkey’s attempt to quash its own currency troubles by hiking interest rates by 4.25 per cent [to 12 per cent] overnight seems to have steadied the recent fears of an emerging market rout.
‘Whether other emerging markets follow suit or the optimism can survive another expected $ 10billion of tapering tonight is another question, but for now fears that an emerging market collapse would drag western economies down seemed to have subsided.
‘Investors are still optimistic that an overall better than expected corporate earnings season could make a second round of tapering a rather safe bet.’
Sainbury’s shares dropped 5 per cent after Justin King announced he would step down as chief executive this July.
King, who has run the supermarket chain for 10 years, will be replaced by group commercial director Mike Coupe. The stock was down 19.15p at 337.55p in early trading.
The FTSE 100 was 57.9 points higher at 6,630.2 as Turkey’s surprise interest rate hike to 12 per cent reassured investors that emerging markets are ready to take emergency action to defend their currencies and economies.
Emerging markets have been boosted in recent years by plentiful cheap money generated by the US Fed’s stimulus drive, but the central bank is now looking to wind down its programme as the American economy recovers.
Mining stocks jumped by as much as 5 per cent today as production updates from two major players helped sustain the London market’s recovery.
The reports from Antofagasta and Anglo American were much needed by investors after the emerging markets wobble of Friday and Monday.
Chilean miner Antofagasta jumped 37.5p to 860p as it reported a record year of copper production in 2013, driven by a strong final quarter.
It was a similar story from Anglo American following higher output in the three month period for iron ore, copper and diamond production. Shares surged 5% or 71p to 1414.5p.
Barclays shares were also higher, up 10p to 283.3p, amid more details of the cost-cutting measures being planned by chief executive Antony Jenkins. He is reported to be ready to close a quarter of its 1,600 branches in the UK and cut hundreds of investment banking jobs.
Outside the top flight, shares in Mulberry slumped 26 per cent or 23p to 663.5p after the handbag maker blamed poor UK sales over the Christmas period for a substantial miss to profits expectations.
The FTSE 100 has opened 43.9 points higher at 6,616.2 after Turkey’s midnight decision to hike interest rates to defend the lira helped to stem an emerging markets sell-off.
Turkey’s central bank defied opposition from Prime Minister Tayyip Erdogan to raise its overnight lending rate from 7.75 per cent to 12 per cent – a much sharper move than economists had forecast – as it battled to shore up the country’s crumbling currency.
The emergency action reassured investors enough to lift Asian equity markets, and European markets have followed suit this morning. Germany’s DAX and France’s CAC 40 were both up 1 per cent in early trading.
However, traders remain on tenterhooks ahead of a decision by the US Federal Reserve later today over whether to cut its vast stimulus programme.
Turmoil in emerging markets over the withdrawal of cheap US money might not deter the move, as Fed policymakers are likely to be guided instead by overall signs of improvement in the US economy.
They reduced bond-buying by 10billion to 75billion a month in December, and are now widely expected to ‘taper’ this further to 65billion a month.
Midnight meeting: Turkey’s central bank raised interest rates sharply as it battled to shore up the country’s crumbling currency
Chairman Ben Bernanke is presiding over his last policy meeting at the US central bank before handing over to new boss Janet Yellen. A statement is due at 7pm UK time.
‘The Turkish central bank’s bold decision to raise interest rates to 12 per cent yesterday evening appears to have given the markets a significant boost over night,’ said Alpari analyst Craig Erlam.
‘We’ve seen a huge amount of concern in the markets since the end of last week in response to the across the board selling in emerging market currencies.
‘This was always going to be a risk when the Federal Reserve started reducing its asset purchase programme, with the markets no longer being flooded with liquidity and investors being offered higher rates closer to home.
‘However, the action taken by the Turkish central bank should significantly reduce the capital outflows and even draw some money back into the country. If other countries follow suit, this should re-stabilise the markets at a time when further Fed tapering is widely expected.’
Others were more cautious, arguing that the problems in emerging market economies such as Argentina, where the peso has dropped sharply, and Ukraine which faces widespread social unrest, were not over and that equity markets could remain volatile over the next few weeks.
The Footsie closed up 21.67 points at 6,572.33 yesterday.
Stocks to watch today include:
ROYAL DUTCH SHELL: The British oil firm said it had agreed to sell a 23 per cent stake in a Brazilian oil project to Qatar Petroleum International for $ 1billion.
ANGLO AMERICAN: The miner’s iron ore production rose more than expected in the fourth quarter, recovering from trouble at the division’s largest mine and copper output also rose to a quarterly record.
CARPHONE WAREHOUSE: Europe’s largest independent mobile phone retailer has signed a ‘preferred partner’ agreement with Samsung Electronics that will see it operate over 60 Samsung stand-alone stores across Europe.
ANTOFAGASTA: Chilean miner Antofagasta said its cash costs for this year would be in line with 2013, as it posted record full year copper production.
MULBERRY: The luxury fashion group warned its annual profit would be substantially below market forecasts after heavy discounting over Christmas hurt its UK sales and its wholesale business was hit by order cancellations.
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