Fears that the Federal Reserve will trim its bond-buying programme were heightened today by better-than-expected jobless claims numbers from the US at lunchtime. The Fed has previously stated that tapering will begin when the labour market improves, and today the US announced that the number of people claiming unemployment benefit dropped to its lowest level since October 2007. This report comes halfway through August, and some members of the Fed have stated tapering could begin next month. Traders closed out long positions, as they are afraid a reduction in the stimulus package is now imminent.
In London, the mining sector is the biggest loser, shedding over 2%. Natural resources stocks were in demand at the beginning of the week, when there was speculation about a Chinese stimulus package, but traders have taken profit today.
Across the pond, the Dow is down 170 points at 15,167. US equities opened lower, and poor industrial production and Empire manufacturing figures also encouraged traders to go short.