Stocks finish week in red again

The FTSE finishes offside for the fifth week in a row; the first five-week losing streak since early 2011.

This week everything was working against the equity markets, with the Federal Reserve, China, and Greece all having their own role to play. Ben Bernanke of the Federal Reserve caused the most damage by discussing the possibility of cutting back on the size of the monthly bond-buying programme. Investors have come to depend on a stimulus package, and any talk of it being reduced could put pressure on equity benchmarks.

The slowdown in China could be accelerated if the country endures a credit crunch. The rate at which Chinese banks lend to each other has spiked, and there is a fear that they are overstretching themselves. According to the HSBC survey, the Chinese manufacturing sector has contracted for a second consecutive month; if credit lines in China dry up, we could see further declines in manufacturing.

Traders thought the eurozone debt crisis was dead and buried but old fears were renewed when the smallest partner of the Greek coalition resigned. If uncertainty persists about Greece we could see stocks open even lower on Monday.

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