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Lloyds stake sale and Fed angst dent markets
by Chris Marshall on Sep 17, 2013 at 09:48
Investors sold shares, trading Lloyds Banking Group (LLOY.L) stock in large volumes, ahead of the start of a meeting of US policymakers today that is expected to mark the beginning of the end of the world’s biggest stimulus scheme.
Alongside mining shares, Lloyds bore the brunt of selling in London after the UK government announced that it had raised £3.2 billion from the sale of a 6% stake in the bank.
The sale to institutional investors spurred a flurry of action in Lloyds shares, which dropped 2.2% to 75p after their 93% gain over the past 12 months.
Investors were anxiously poised for the outcome of the Federal Reserve’s two day committee meeting. On balance economists expect the central bank to announce a small ‘tapering’ back of its $85 billion a month asset buying scheme. Many market participants say the market reaction may not actually be too brutal as a slimming back of the scheme has long been baked into asset prices.
In London, the FTSE 100 dropped back 0.4% to 6,596, in line with losses across Europe. The blue chip index remains up 3.3% so far in September.
Banks fell in Lloyds’ wake, with Barclays (BARC.L) down 2.2% to 298p and Royal Bank of Scotland (RBS.L) off by 2% to 359p. Barclays will be forced to refund 300,000 customers their interest on personal loans after making mistakes on the paperwork, it was revealed today.
Mining stocks took their usual place among the biggest movers, with Glencore Xstrata (GLEN.L) and Vedanta (VED.L) both down around 3% to 332p and £11.50 respectively. Glencore Xstrata was hit by a downgrade from UBS to ‘neutral’ from ‘buy’.
The US dollar was trading slightly lower amid the Fed angst, down 0.1% versus a basket of currencies. The pound was trading up 0.15% against the currency, to $1.5916, after the Office for National Statistics reported that UK inflation had dropped to 2.7% annually in August, from 2.8% the previous month.
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- Lloyds Banking Group PLC (LLOY.L)
- Royal Bank of Scotland Group PLC (RBS.L)
- Barclays PLC (BARC.L)
- Glencore Xstrata PLC (GLEN.L)
- Vedanta Resources PLC (VED.L)
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