Bernanke's 'grave concern' comments hit markets

Disappointment over US Federal Reserve chairman Ben Bernanke’s failure to offer clear signals of imminent economy boosting measures sent the FTSE 100 Index into the red today.

Disappointment over US Federal Reserve chairman Ben Bernanke’s failure to offer clear signals of imminent economy boosting measures sent the FTSE 100 Index into the red today.

Mr Bernanke said the Fed would consider more moves to help the economy, as he warned high US unemployment was a “grave concern”.

But London’s blue chip share index reversed earlier gains to close 8 points lower at 5711.5 amid investor frustration after his comments failed to provide a strong hint of the Fed’s next policy move.

Investors had hoped that Mr Bernanke’s speech at the Jackson Hole symposium in Wyoming would suggest the next round of so-called quantitative easing (QE) was on the cards as early as next month.

In a mixed reaction to the speech, the Dow Jones Industrial Average on Wall Street held on to most of its opening advance, up 0.7%.

The pound also strengthened against the US dollar, to 1.59 dollars, as the speech kept the prospect of more QE on the agenda, even if the timing is uncertain.

But sterling slipped against the euro, to 1.26 euros.

Miners recovered from recent weakness on the FTSE 100, with Xstrata and Glencore top of the risers board as they shrugged off growing shareholder dissent over their mega merger.

There are increasing doubts that the deal will go through, with activist investment fund Knight Vinke today becoming the latest Xstrata shareholder to confirm intentions to vote against the merger unless terms are revised.

Glencore rose 8% or 27.6p to 385.1p, while Xstrata lifted 51.2p to 952.2p.

Cruise ship firm Carnival fell more than 1% or 26p to 2159p amid concerns over the impact of tropical storm Isaac on its operations along the Gulf Coast.

Shares in advertising giant WPP continued the poor performance seen after it lowered revenues guidance due to weaker trends in North America. Shares lost 2% after Thursday’s half-year results and were down another 3.5p to 815p today.

Outside the top flight, housebuilder Redrow was 4.1p higher at 155.1p after chairman Steve Morgan tabled a takeover approach for the company he founded in 1974. While the proposal of 152p a share is below the current price, it represents a 24% premium on Redrow’s average price over the last three months.

Frankie & Benny’s and Chiquito parent Restaurant Group rose 2% or 7.5p to 329.5p as it posted a 7% rise in profits and said it would open 30 sites this year.

Elsewhere, paving stone maker Marshalls rose 3.75p to 84.75p despite news of a 38% plunge in half-year profits to £7.6 million.

The group is cutting costs and production – including the closure of its Maltby paving slab manufacturing plant – to weather a worse-than-expected construction slump.

The biggest Footsie risers were Glencore International up 27.6p to 385.1p, Xstrata up 51.2p to 952.2p, Petrofac ahead 41p to 1502p and Intertek up 70p to 2815p.

The biggest Footsie fallers were Eurasian Natural Resources down 4.6p to 301.9p, Sainsbury’s off 4.9p to 327.6p, Centrica down 4.8p to 326.7p and Severn Trent down 25p to 1731p.

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