FTSE likely to spend day in the red

Ahead of the European open, the Japanese Nikkei has closed down 6.35% on the day, and is now more than 20% shy of its year highs.

The confirmation of a bear market in Japan will have given equity traders around the globe a surprise, especially with the amount of government fiscal intervention that has occurred in the last six months.

The growing importance of the Japanese markets as far as early morning sentiment is concerned has meant that the FTSE has fallen with it. This morning we have seen the FTSE hit the 200-day moving average; a close below this would likely trigger a change of mentality for many investors. Although we have seen a certain amount of buying on the dip, the volumes of business have been very thin.

As far as the FTSE equities are concerned, the overnight news that RBS CEO Stephen Hester will resign before the end of the year has shaken the markets. Although there are still questions to answer, it appears that the guiding hand of the government has overseen this change. With markets so jittery and confidence delicately balanced, announcing the departure of your CEO without having a replacement already organised was always likely to see the market react; consequently, in the first two hours RBS shares were off 5.72% on the day.

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