UK investors feel the stock markets have climbed too far since September, so they are pulling in the...
UK investors feel the stock markets have climbed too far since September, so they are pulling in the reins this morning to drag the FTSE downwards.
The FTSE 100 fell 24.1 points or 0.5% to 5254, hit mainly by ARM Holdings, which has climbed 90% by yesterday since September 21, Granada and Sage Group.
All three companies' earnings growth potential is unrealistic according to market analysts, who have duly altered their stance on stocks to reflect sentiment. Arm has lost 11.5p or 2.9% to 379.5p, Granada has lost 459p or 2.9% to 151p, having gained 60% since Sept 21, and Sage dropped 6.25p or 2.6% to 232.25p, having also gained 56% since Sept 21.
According to Donald Tosh, head of corporate research at Morley Fund Management: "The market is having a day off. Fund managers have decided to pause for a break before they go further, or they are coming down because the world economy is not as safe as they thought a couple of days ago."
That was not the case in the US yesterday as stocks rose on the back of strong news there are likely to be lower interest rates in the US and a growth revival in Europe.
American Express and Microsoft helped the Dow Jones to recoup most of its 14% loss after the Sept 11 terrorist attacks, and Sun Microsystems and Siebel Systems drove the Nasdaq Composite index to its highest level since August 28.
The Dow Jones advanced 58.78 points or 0.6% to 9613.1, although this does not show the 1.8% gain it had earlier in the day, and the Nasdaq rose 7.06 points or 0.4% to 1844.59 after rate cuts in Europe and the Federal Reserve cut the overnight rate to 2%, making this the 10th reduction this year.
One of the biggest movers includes Wal-Mart Stores - which is often included in technology fund portfolios - after the retail group announced higher sales in October. Wal-Mart's share price subsequently climbed $1.39 to $55.21.
However, as one might have expected, the Asian stockmarkets have dropped considerably this morning and Japan's main index has fallen to a one-month low amid concerns that banks' ability to write off bad loans will be hampered a poor performing economy.
Lenders made up a quarter of the market's loss, and market sentiment is now so anti-banking that it has sent the Nikkei 225 index down 2.1% to 10,215.71.
In Hong Kong, however, the Hang Seng has risen 0.7% to a two-month high at 10,609.25, led by China Unicom and Sun hung Kai Properties. Over recent months there has been concern that real estate would not be a good investment as the local government had decided to restrict building expansion, however, that has changed again and the belief is declining borrowing costs will boost real estate sales.
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