Market update: Negative US data relieve concerns, providing a breathing space for equities – 31.05.2013

Source: Henderson Global Investors

Negative US data showing an unexpected rise in first-time claims for unemployment benefit, as well as a slightly sub-forecast latest reading on Q1 gross domestic product (GDP) growth had a positive effect on US stocks on Thursday. The latest releases eased concerns that the Federal Reserve (Fed) may rein in its quantitative easing policy soon. The Dow Jones was up 0.1%, whilst the S&P 500 rose 0.4%. This was driven in part by the semiconductor industry where chipmaker Avago Technologies’ shares gained 9.8% after forecasting Q2 revenues way above expectations. EMC Corp, the data storage equipment maker was up 5.4% after initiating a quarterly dividend policy and increasing its share buy-back programme.

The Nikkei was also positively affected by easing concerns over the Fed, recouping some of the 5.2% losses it incurred on Thursday with a 1.4% gain in Friday’s trading. Exporters led the recovery with Sony, Panasonic and Fanuc Corp making significant gains. European markets have opened disappointingly, with the FTSE Eurofirst 300 down 0.8%, and the FTSE 100 down 1.0% at the time of writing. Investec and Man Group have both fallen over 3%, but there is little corporate news directing the market in general.