FT-SE 100: Treasurers turn back to cash

LONDON MARKET

UK stocks are expected to fall this week and gilts to extend gains, pushing yields to new lows, as investors shun equities on concern over the impact of slowing growth on profits. "Corporate treasurers are saying: 'I want no risk'. They're parking their money in gilts or cash," said John McNeill, market strategist at Sutherlands stockbrokers. "If it's the only thing that people are willing to buy then yields can go to nothing."

On Friday, the benchmark 7.25 per cent 10-year government bond yield closed at 5 per cent, having touched 4.98 per cent, the lowest in the 30 years for which the Bank of England has records. That's down over 20 basis points since last week and 60 basis points down since mid-August.

Stock markets were shaken last week, sending investors to bonds, after Federal Reserve chairman, Alan Greenspan, dashed hopes of rate cuts to help boost growth. That was followed by a report that the IMF cut its forecast for global economic growth to 2 per cent, from 3.1 per cent in May.

"Wherever equities go, bonds will do the opposite," said James Mitchell, market strategist at Nomura International. "Over the next few weeks yields will be headed lower. We could see 4.75 per cent on the benchmark bond."

Gilts are expected to gain on optimism that the Bank of England will cut interest rates. Reports showed inflation slowed to the target 2.5 per cent rate in August. "UK economic news does point to a reduction in rates," said Robin Younger, equity strategist at Henry Cooke Lumsden.

The FT-SE 100 index on Friday slid 77.3 points, or 1.5 per cent, to 5055.6, led by Shell Transport & Trading, after the company warned it may write down its assets this year because of waning Asian demand and plummeting oil prices. Still, the index closed the week little changed, down 1.23 per cent.

The broader FT-250 index fell 1.08 per cent last week to 4646.8, its losses led by engineering companies that export a large proportion of their products. The FT-SE 350 index, a combination of the other two, dropped 1.2 per cent to 29.5. TI Group slid 21.4 per cent, Cobham lost 14.2 per cent and Siebe fell 15.2 per cent.

"The depressing effect on the UK manufacturing industry from slow growth in export markets and the strength of the pound has resulted in lower growth during 1998," said Richard Jeffrey, chief economist at Charterhouse Tilney.

Start your day with The Independent, sign up for daily news emails
Sport
sportSo, how closely were you paying attention during 2014?
Arts and Entertainment
Dennis speaks to his French teacher
tvThe Boy in the Dress, TV review
News
One father who couldn't get One Direction tickets for his daughters phoned in a fake bomb threat and served eight months in a federal prison
people... (and one very unlucky giraffe)
Arts and Entertainment
Joel Edgerton, John Turturro and Christian Bale in Exodus: Gods and Kings
film
PROMOTED VIDEO
Arts and Entertainment
Brendan O'Carroll as Agnes Brown in the 2014 Mrs Brown's Boys Christmas special
tvCould Mrs Brown's Boys have taken lead for second year?
News
i100
Arts and Entertainment
The Plaza Theatre in Atlanta, Georgia was one of the 300 US cinemas screening
filmTim Walker settles down to watch the controversial gross-out satire
Sport
Alexis Sanchez missed a penalty before scoring the opening goal with a header at the back post
footballArsenal vs QPR match report
News
Members and supporters of the lesbian, gay, bisexual, transgender (LGBT) community walk with a rainbow flag during a rally in July
news
News
i100
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Arts and Entertainment
Amy Adams and Christoph Waltz in Tim Burton's Big Eyes
film reviewThis is Tim Burton’s most intimate and subtle film for a decade
Arts and Entertainment
Jack O'Connell stars as Louis Zamperini in Angelina Jolie's Unbroken
film review... even if Jack O'Connell is excellent
Arts and Entertainment
Madonna is not in Twitter's good books after describing her album leak as 'artistic rape and terrorism'
music14 more 'Rebel Heart' tracks leaked including Pharrell Williams collaboration
News
i100
Sport
Rooney celebrates with striker-partner Radamel Falcao after the pair combine to put United ahead
footballManchester United vs Newcastle match report
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Selby Jennings: SVP Model Validation

Not specified: Selby Jennings: SVP Model Validation This top tiered investment...

Selby Jennings: Oil Operations

Highly Competitive: Selby Jennings: Our client, a leading European Oil trading...

The Jenrick Group: Night Shift Operations Manager

£43500 per annum + pension + holidays: The Jenrick Group: Night Shift Operatio...

SThree: Trainee Recruitment Consultant - LONDON

£20000 - £25000 per annum + OTE £40,000 + Car + Pension: SThree: SThree are a ...

Day In a Page

A Christmas without hope: Fears grow in Gaza that the conflict with Israel will soon reignite

Christmas without hope

Gaza fears grow that conflict with Israel will soon reignite
After 150 years, you can finally visit the grisliest museum in the country

The 'Black Museum'

After 150 years, you can finally visit Britain's grisliest museum
No ho-ho-hos with Nick Frost's badass Santa

No ho-ho-hos with Nick Frost's badass Santa

Doctor Who Christmas Special TV review
Chilly Christmas: Swimmers take festive dip for charity

Chilly Christmas

Swimmers dive into freezing British waters for charity
Veterans' hostel 'overwhelmed by kindness' for festive dinner

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Isis in Iraq: Yazidi girls killing themselves to escape rape and imprisonment by militants

'Jilan killed herself in the bathroom. She cut her wrists and hanged herself'

Yazidi girls killing themselves to escape rape and imprisonment
Ed Balls interview: 'If I think about the deficit when I'm playing the piano, it all goes wrong'

Ed Balls interview

'If I think about the deficit when I'm playing the piano, it all goes wrong'
He's behind you, dude!

US stars in UK panto

From David Hasselhoff to Jerry Hall
Grace Dent's Christmas Quiz: What are you – a festive curmudgeon or top of the tree?

Grace Dent's Christmas Quiz

What are you – a festive curmudgeon or top of the tree?
Nasa planning to build cloud cities in airships above Venus

Nasa planning to build cloud cities in airships above Venus

Planet’s surface is inhospitable to humans but 30 miles above it is almost perfect
Surrounded by high-rise flats is a little house filled with Lebanon’s history - clocks, rifles, frogmen’s uniforms and colonial helmets

Clocks, rifles, swords, frogmen’s uniforms

Surrounded by high-rise flats is a little house filled with Lebanon’s history
Return to Gaza: Four months on, the wounds left by Israel's bombardment have not yet healed

Four months after the bombardment, Gaza’s wounds are yet to heal

Kim Sengupta is reunited with a man whose plight mirrors the suffering of the Palestinian people
Gastric surgery: Is it really the answer to the UK's obesity epidemic?

Is gastric surgery really the answer to the UK's obesity epidemic?

Critics argue that it’s crazy to operate on healthy people just to stop them eating
Homeless Veterans appeal: Christmas charity auction Part 2 - now LIVE

Homeless Veterans appeal: Christmas charity auction

Bid on original art, or trips of a lifetime to Africa or the 'Corrie' set, and help Homeless Veterans
Pantomime rings the changes to welcome autistic theatre-goers

Autism-friendly theatre

Pantomime leads the pack in quest to welcome all