The FTSE 100 slipped slightly in early trade, falling 0.1% to 6,617, retreating after a 1% jump pushed it to 6,625.39 on Thursday.

Shavaz Dhalla, a financial trader from Spreadex, said that the post-Fed rally has “begun to lose steam”.

“Clearly with many markets trading at such high levels, investors are starting to wonder if the present valuation of equities is too high and maybe taking a step back from the markets and awaiting the next economic disaster could provide a better buying opportunity,” he said.

Nevertheless, Dhalla highlighted that it has been a very optimistic week for equities, especially given the withdrawal by well-known hawk Larry Summers from the race to become Fed Chairman.

“Furthermore, since the Fed also failed to provide a specific calendar for reductions, investors can bask in the knowledge that the lifeline supporting global markets will continue for a bit longer.”

A speech in New York by Kansas City Fed President Esther George will be closely watched today as she was one of the few policymakers to back a tapering of the Fed’s stimulus. George had suggested the central bank reduce its $85bn per month in asset purchases by $15bn to $70bn ahead of this week’s policy meeting.

Also on investors’ minds today will be the looming elections in Germany this weekend, with the outcome still highly uncertain given that a rising Eurosceptic movement across the country could complicate things for Angela Merkel’s CDU party.

The Fed wasn’t the only central bank to surprise markets this week as the Reserve Bank of India (RBI) announced a 25 basis-point rise in its main policy rate, to 7.5% from 7.25%, although it unwound some short-term tightening measures.

Shares in food and sweeteners manufacturer Tate & Lyle were falling heavily this morning after the stock’s rating was cut by Credit Suisse from ‘outperform’ to ‘neutral’. The bank said: “The long-running forward price-to-earnings multiple is 12 versus 13.5 today. That looks right to us.”

United Utilities was also being dragged down after Beaufort Securities lowered its recommendation to ‘hold’.

Heading the other way was supermarket chain Sainsbury after Citigroup upgraded the group to ‘neutral’ ahead of its second-quarter trading update in a couple of weeks. The bank said it expects a “big improvement” in like-for-like sales trends from the first quarter.

Falling metal prices were weighing on mining stocks this morning with Fresnillo, Randgold, Vedanta, Antofagasta, Anglo American and ENRC falling sharply as gold, silver and copper values took a hit.

Source: ShareCast