The Fed-inspired rally lost momentum on Friday as volatility returned to the market ahead of the holiday season.
Investors cheered the historic US quarter-point interest rate rise on Thursday, but the FTSE 100’s winning streak came to an abrupt halt as it tumbled 50.12 points, or 0.82pc, to 6,052.42 amid renewed concerns about the state of the global economy. Despite its move into negative territory, the blue chip index still managed to record its biggest weekly gain in a month (1.7pc).
Shares in Smith & Nephew bucked the trend. It spiked in afternoon trade after a report in the United States suggested it had become a takeover target. The report said Stryker had made a bid of $18bn for the British artificial hip maker, with Goldman Sachs purported to be acting as an adviser.
It isn’t the first time bid speculation has puffed up the stock; late last year investors piled into the stock on the widely-held expectation the company would be bought. The FTSE 100 stock advanced 52p, or 4.6pc, to £11.72.
Smith & Nephew one-day graph (Source: Bloomberg)
Surprisingly, commodity stocks were among the top gainers, as the price of metals and oil rose. Even a lowered target price by Goldman Sachs didn’t dampen Anglo American’s gains. Shares rose 5.7pc to 278.7p. Rio Tinto and Antofagasta climbed 0.2pc and 0.3pc, respectively.
A move by Moody’s to downgrade Glencore’s credit rating one notch to junk status stalled it in its tracks, as the stock closed flat at 80.9p.The credit rating agency expects mining market conditions to be weak over the next two years. It also said the outlook on the rating is stable.
Elena Nadtotchi, of Moody’s, said: “We believe that Glencore has the capacity to adjust its balance sheet to a reduced earnings level in order to maintain its investment grade ratings.”
Moody’s also warned it may cut BHP Billiton’s credit rating due to the dramatic fall in iron ore prices. The announcement added to BHP’s woes, putting its progressive dividend under further pressure. Nonetheless, the stock jumped 2.5pc to 717.2p.
After falling to the bottom of the index yesterday, gold producers advanced following a rebound in gold prices. On Thursday, the price of gold recorded its biggest daily loss in five months, but it bounced back yesterday - up 1.8pc to $1,071 per ounce. As a result, Randgold Resources and Fresnillo added 1.4pc and 0.7pc respectively.
Beleaguered Rolls-Royce also made gains after its boss Warren East invested £100,000 by buying 17,3000 shares at just over 577p. Andy Chambers, of Edison Investment Research, said the share purchase, which came hot on the heels of a new senior management structure, will be seen as a measure of confidence. The stock was 3p, or 0.5pc, higher at 576.5p.
On Aim, shares in Scancell ticked 2.8pc higher to 14p after it announced plans for its US team to lead a Phase II study with the company’s lead cancer vaccine, SCIB1.
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