Attention now turns to Washington, as markets await the outcome of the long-awaited September meeting of the Federal Reserve. US markets failed to remain in positive territory, although declines were limited.
By 3.30pm (London time), the Dow Jones had slipped 0.23% to 11381.86, while the S&P fell 0.4% to 1197.28. In London, the FTSE spreads dropped lower during the afternoon, and was down 1.4% at 5289.31.
Markets on tenterhooks before Fed announcement
US markets have aped their cousins in the UK, shifting between gains and losses as spread betting investors nervously await tonight's Fed announcement. No one wants to be caught the wrong side of any Fed move, so the net result has been lots of movement, but no permanent trend either way.
This is August and September in microcosm; investors have been buffeted by a mixture of good and bad news, and both gains and losses have been transitory. I cannot help but think that anything less than full-blown QE3 will prove to be a disappointment for markets.
IMF sounds warning on banks
Yesterday the IMF warned that the global economy was entering a difficult period. Today, the fund has weighed in with comments on the fragility of the global banking system. The IMF said that turmoil in Europe and the US had undone much of the recovery seen in global finance since the crisis of 2008. It added that the size of the damage to European banks was around €200 billion, and that credit and liquidity risks had all risen since the last report in April.
The IMF report highlights one of the major effects of the eurozone crisis, namely that, by their inability to find a solution, eurozone leaders risk provoking a second financial crisis, potentially even larger than the first.
This was the point US Treasury Secretary Tim Geithner tried to get across last week in Poland, but his efforts were snubbed by eurozone leaders.
For the moment, the focus is on Washington and the Federal Reserve, but once the excitement over QE3 is over, Europe will return to the forefront of everyone's mind.
Ocado keeps falling
Also in shares spread betting, a bad week for Ocado keeps on getting worse. The grocery delivery firm slumped on Monday after a badly-received trading update, and the shares are down another 10% today, to 104.2p.
The reason for the latest fall is supermarket giant Tesco. Rumours of a new price war are in the air, as Tesco seeks to win market share from competitors. Any such price war could have a major impact on Ocado, since Tesco (with a market capitalisation of £30 billion) is far larger than Ocado (market cap: £600 million).
Panmure Gordon observed that a price war would have a disproportionate effect on trading at Ocado, and the broker now expects the online supermarket will lose money for the next two years. It repeated its 'sell' stance and 50p target.
Foster's gives in to SABMiller
It's been a long courtship, but SAB Miller has finally managed to win over Foster's, after increasing its cash offer for the iconic Australian brewer.
SAB hiked its price from the A$9.5 billion that it had offered in June, to A$10.8 billion, a level that Foster's found acceptable. SAB had previously said it considered its offer to be fair value, but evidently its desire to acquire Foster's overcame any qualms the company had about overpaying.
After all, Foster's enjoys almost 50% market share in Australia and is now extremely attractive having completed the disposal of its underperforming wine business. SAB Miller shares were down 1.7% at 2184p
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'Spread Betting Investors Nervous Ahead of Key Fed Announcement', Article by IG Index, last update: 21-Sep-11
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