Markets are showing up red this morning after the US Federal Reserve chairwoman hinted interest rates could rise earlier than expected.
The FTSE 100 and FTSE Eurofirst 300 are down marginally this morning while the Nikkei 225 and Shanghai Composite index are also in negative territory.
This comes after Ms Yellen insisted there had been no change in Fed policy in spite of official forecast rates of 1 per cent by the end of next year - an increase in previous forecasts which suggested a median 0.75 per cent rate.
John McGrath, head of distribution at TwentyFour Asset Management said the Fed needed to “assure markets that any future rate rises are not just around the corner”.
“On this point we would expect the Fed to follow a Carney-style set of measures that essentially follow the output gap in the economy,” he said.
“The Fed’s assessment of the economy should aid us with roughly how big that gap is and how long the period might be to the first hike.”
However, the new forecasts by the Fed suggest there are differences of opinion within the Federal Open Markets Committee as to when rates need to rise.
Elsewhere, insurance and gambling stocks dragged on the FTSE 100 yesterday following chancellor George Osborne’s Budget.
Among the hardest hit were Legal & General, which ended the day down 8.2 per cent, Partnership Assurance which fell 55 per cent and Aviva which was down 5.2 per cent yesterday.
Gambling stocks William Hill and Ladbrokes also dropped 6.8 per cent and 11.9 per cent and have continued to drop this morning in early trading.