FTSE Falls Back Below 5900 on US Fiscal Cliff Jitters – City Index UKDecember 18, 2012
LONDON–(Marketwire – December 17, 2012) – City Index UK — The FTSE 100 fell 0.6% in early morning trade on Monday as investors scaled back positions in heavyweight financial stocks such as banks and insurers on concerns over the US Fiscal Cliff.
By 11.00am, the FTSE 100 was trading at 5885, losing 36pts or 0.6% and tracking similar losses across broader European trade.
We are getting into the quiet periods in the market now being one week before Christmas and the time that most investors take a leave of absence from the markets. Volumes are getting lower and lower in the underlying market, meaning that prices are becoming increasingly susceptible to spikes when trades of above normal market size take place. This can create an additional edge of volatility that traders need to be wary of.
Indeed the US Fiscal Cliff negotiations is continually the leading headline being attributed to most moves in the market and this is likely to continue into the year end. Talks continue but it seems negotiations remain some distance from finding a middle ground between spending cuts and tax rises despite the recent Republican lead U-turn to consent to some tax rises for those earning over $1m. The Democrats maintain that tax hikes should take place for those earning over $250,000 a year and so this U-turn from the Republicans has failed to entice a Democratic U-turn of their own.
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