Market update: Cyprus concerns swept aside for now

Yesterday the S&P 500 Index slipped 0.2% to 1548.34 – its third consecutive day of decline. Nonetheless, the index remains less than 1% below its record close on 15 March 2013, reflecting optimism over the health of the US economy, due in part to the Federal Reserve’s ongoing bond buying programme. This helped to offset uncertainty over Cyprus after the country’s parliament voted to reject a tax on bank deposits as a requirement for its much-needed bailout from the European Central Bank.

Europe shrugged off concerns over contagion from Cyprus’s financial system this morning, with the FTSE Eurofirst 300 Index up 0.3% while the FTSE 100 is flat at the time of writing, ahead of George Osborne’s Budget speech later today. The more defensive sectors such as telecommunications, utilities and healthcare are amongst the better performers.

The Nikkei 225 continued its upward trend, closing Wednesday up 2.0% at 12,468.23, a rise of 51.3% since 4 June 2012, its lowest point over the past 12 months. Interest in Japanese equities by foreign investors has soared since the start of the year, supported by prime minister Shinzo Abe’s pro-growth policies. Japanese bank Sumitomo Mitsui Financial, which initiated the ¥200bn share buy-back of a decade-old government stake last week, was one of the best performing stocks, gaining 6.1%.