Market update: Investors play guessing game on central bank policies – 02.05.2013

Source: Henderson Global Investors

Wall Street sold off yesterday (S&P 500 -0.9%; Dow Jones -0.9%) after a clutch of US data added to evidence that the pace of global growth was slowing. ADP’s national employment report showed that private sector employment increased by 119,000 last month, well below forecasts for 150,000. US construction spending dropped 1.7% in March, with downward revisions to January’s data seeing economists lowering their forecasts for first quarter growth. The Institute for Supply Management’s manufacturing index also slipped back from 51.3 to 50.7 in April. The Federal Reserve’s latest policy meeting saw the bank hedging its bets about the fate of its asset purchases: a line added to the bottom of its regular statement said that it could “increase or reduce” the pace of its government bond purchases depending on the outlook for the job market and inflation.

European markets are mixed this morning (FTSE 100 -0.1%; FTSE Eurofirst 300 +0.1%) ahead of the European Central Bank’s eagerly anticipated decision on interest rates, which is due later today. The Chartered Institute of Purchasing and Supply will release its construction PMI for the UK, while manufacturing output data will be announced for the eurozone, Spain, Germany, Italy and France. At the stock level, BG Group and Royal Dutch Shell are among the climbers, after their earnings beat analysts’ expectations.