FTSE 100 falls and ex. dividend impacts

FTSE 100 @ 5584.51, -133.88 (-2.34%).
DJIA @ 11855.68, -10.95 (-0.09%)
NASDAQ @ 2306.29, +13.44 (+0.59%)

So the FTSE played catch up with Wall St and Asian markets today with a fall of 2.34% and settling below 5600. As I write the Dow Jones IA is down just 10.94 points or basically treading water.

Took a little time for the following snippet to sink in and it came to me late in the day really.

"Integrated oil companies BP and Royal Dutch Shell both trade in ex-dividend format on Wednesday morning which, all other things being equal, should knock around 17 points from the FTSE 100 value at the outset." (Sharecast).

Basically, the slice of returned capital or dividend for each of these 2 would be equal to a 17 point fall on the FTSE. 
Being just based upon the dividend this would be approx 4.27p off BP and around 25.6p off EACH of the two Royal Dutch Shell listings.
This is entirely due to the weighting and position by capitalisation that each share holds in the FTSE100 which, using yesterdays data (I think) had these 3 companies as follows:


3 - BP ex div by 4.27p (0.95% of 447.75p)
4 - RDS A shares ex div by 25.6p (1.16% of 2216p)
7 - RDS B shares ex div by 25.6p (1.15% of 2221p)


As I said this didn't really register as being of any significance in the context of the markets falls but as I started to trawl around, the following information started to piece a few clues together


5 - Glaxo also went ex div by 16p (1.17% of 1359p)
11 - Astrazeneca went ex div by 51.83p (1.79% of 2896.5p)
9 - BG Group ex div by 6.58p (0.47% of 1413p)
22 - Reckitt Benckiser ex div by 55p (1.62% of 3394p)


Now if BP and Royal Dutch Shell accounted for 17p of the fall by going ex dividend and using a crude calculation (these 3 companies accounted for approx 15% of the FTSE on the 1st April this year).
When I look at the other 4 companies these accounted for a further 11% on the same date, so could feasibly account for another teen digit impact of lets say 13p. 
So, it could be argued that approx 30p, or 0.052%, of the FTSE's fall today is due to ex dividends, which leaves 103.88 points (1.82%) due to market fears.
Only a small consolation but it is a contributory factor that isn't negative.

US Debt ceiling - still no decision.

Still deadlocked in Congress as the "widely assumed" 2nd August deadline fast approaches. 

Seems like temporary insanity amongst the elected officials despite my appreciating the drivers to manage budgets and manage debt.
However, they long since opted in to "spending their way out of the credit crunch" so it seems woefully late and inadequate to now play with the livelihoods of the voters and global markets.

Sometimes seems that they must feel so left out of all the excitement and focus on the Euro's problems with sovereign debt that they have gone out of their way to create their own drama.

It still seems unimaginable particularly when it seems to be in their control. 
The knock-on to that being that it is unimaginable what the impact might be.

Picked an interesting point out of the following article: www.citywire.co.uk: US Debt: why the deadlock may not turn to disaster which hints at a potentially moderate response to a US default/downgrade as fund managers sell out of US bonds in order to maintain a AAA criteria to their portfolios. I seem to recall similar fears of a sell-off by Japanese investors in US bonds (possibly 90's) but can't recall the exact reasoning other than to raise and repatriate funds as the heavily inflated property market in Japan imploded.

As it stands today, China then Japan are the 2 largest holders of US Dollar reserves with both countries holding almost $600bn each. I guess this is due to the dollars position as the "world's  second currency" and the size of the US as a consumer market.
Any significant sell-off would obviously add to and accelerate any devaluation of the dollar (could this be something that a section of Congress want?).

I sort of expect markets to jump (with relief), if it is resolved and obviously fall if the unimaginable occurs. But, the scale of fall is hard to fathom. Its not like Greece, or any other previous default where bankruptcy more or less occurred but might just change perceptions of the dollar forever.
Either way it will help to resolve the uncertainty that markets dislike.

Related articles:

- www.citywire.co.uk: US Debt: why the deadlock may not turn to disaster

Earlier posts:

- Public reaction to Congress debt ceiling impasse.