Market Update: Stocks down on QE exit talks – 17.05.2013

Source: Henderson Global Investors

US equity markets saw a slight pull back yesterday, with the S&P 500 falling 0.5% and the Dow Jones down 0.3%, most likely driven by softer US economic data. More specifically, a weak set of US consumer inflation figures served as a good reminder to investors that economic growth was not yet a certainty; this news was good for US bond investors as the 10-year Treasury yield fell 7 basis points to 1.87%. In other news, US April core consumer prices rose 1.1% year-on-year. There have also been comments by the President of the Federal Reserve Bank of Philadelphia that the US Federal Reserve should taper its quantitative easing (QE) programme this year. Elsewhere, Asian markets were stronger today, the Nikkei 225 closed up 0.7%. Chinese shares also finished higher with the Shanghai Composite gaining 1.4%.

This morning, European stocks are continuing yesterday’s weakness, with the FTSE Eurofirst 300 down 0.4% and the FTSE 100 index falling 0.2%, likely due to the QE debate in the US. Meanwhile, eurozone inflation for April slowed to 1.2% and European car sales in April rose for the first time in 19 months as demand grew in Germany and Spain. Following the implementation of financial reforms, credit rating agency Moody’s upgraded Turkey’s sovereign rating to investment grade status with a ‘stable’ outlook.