The UK market is notably lower on Thursday, after the Federal Reserve indicated scaling down of the stimulus program, in line with expected improvement in the economy. Sentiment was also impacted by manufacturing data out of China. The Asian markets plunged and the U.S. futures indicate a weak open.
Fed Chairman Ben Bernanke Wednesday indicated that the $85 billion-a-month bond-buying program may end altogether by mid-2014 if the economy performs in line with Fed projections. The U.S. central bank played down the low inflation figures, but pledged to keep short-term interest rates at record lows until the jobless rate reaches 6.5 percent.
On the economic front, China's manufacturing activity contracted at a faster pace in June, reducing the prospects of a promising economic recovery, preliminary results of a survey by Markit Economics and HSBC revealed. The flash manufacturing purchasing managers' index fell to 48.3 in June from 49.2 in May. The index is now at its lowest level in nine months.
Closer home, Eurozone business activity logged the smallest downturn since March last year, flash survey data from Markit Economics showed. The composite output index improved to 48.9 in June from 47.7 in May. The reading also exceeded consensus forecast of 48.1.
Germany's manufacturing activity declined at a faster rate in June, defying economists' expectations that the downturn would ease. The seasonally adjusted purchasing managers' index for the manufacturing sector dropped to a two-month low of 48.7 in June from 49.4 in May, data from a survey by Markit Economics and BME revealed. Economists had forecast the index to rise to 49.9.
U.K. retail sales volume including automotive fuel grew 2.1 percent in May from a month ago, when it was down 1.1 percent, the Office for National Statistics said. It was stronger than the expected 0.8 percent increase.
The increase in volume, excluding automotive fuel was also 2.1 percent, which reversed last month's 1.2 percent drop. Economists had forecast 1 percent rise.
The Euro Stoxx 50 index of eurozone bluechip stocks is declining 2.58 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is dropping 2.11 percent.
The FTSE 100 index is declining 2.3 percent.
Randgold Resources is retreating 7.6 percent and Polymetal International is declining 7.2 percent.
Rio Tinto and BHP are down around 4.6 percent each.
The Prudential Regulation Authority has found that five British banks together have a capital shortfall of 27.1 billion pounds. Royal Bank of Scotland has a shortfall of 13.6 billion pounds and Lloyds Banking 8.6 billion pounds, while the requirement for Barclays is 3 billion pounds.
RBS is declining 3 percent and Barclays is falling 3.5 percent. Lloyds is sliding 0.7 percent.
Bucking the trend, Dixons Retail is gaining 5.5 percent after reporting full year results.
Elsewhere in Europe, the German DAX, the French CAC 40 and Switzerland's SMI are notably lower.
Across Asia/Pacific, markets were firmly in the red. Australia's All Ordinaries fell 2 percent, China's Shanghai Composite Index dropped 2.8 percent and Hong Kong's Hang Seng retreated 2.9 percent. Japan's Nikkei 225 ended the session lower by 1.8 percent.
In the U.S., futures point to a lower open on Wall Street. In the previous session, the Dow plunged 1.4 percent, the Nasdaq tumbled 1.1 percent and the S&P 500 plummeted 1.4 percent.
In the commodity space, crude for August delivery is dropping $2.39 to $96.09 per barrel and August gold is falling $83.4 to $1290.6 a troy ounce.
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Market Analysis
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.