Market update: Markets await German vote on OMTs – 11.06.2013

Source: Henderson Global Investors

Global equities closed broadly flat yesterday, with mixed data out of Japan and the US spurring most of the activity. There was some encouragement in the form of an upgrade on the US outlook from “negative” to “stable” by credit rating agency Standard & Poor’s. While this indicates there is little chance of a downgrade, there is also no indication that an upgrade is forthcoming. With regards to the tapering of US quantitative easing, St Louis Federal Reserve President James Bullard noted that he would want to be reassured by inflation data before any decision was made. The S&P 500 was flat, the Dow Jones was down 0.1% and the Nasdaq was up 0.1%.

Japanese markets fell again today (Nikkei down 1.5%). The Bank of Japan’s (BoJ) policy meeting ended without the announcement of any further monetary stimulus; however the BOJ’s tone was more upbeat with a comment about the economy picking up and suggestions that inflation expectations are rising. The Hang Seng and Shanghai Composite followed Tokyo’s lead to close lower. In Europe this morning uncertainty around the German federal court’s vote on the ECB’s bond-buying plan (OMT, outright monetary transactions) is weighing on investor sentiment; euro crisis troubles may be renewed should Germany withdraw its support for the programme. At the time of writing the FTSE Eurofirst 300 is down 1.2% and the FTSE 100 has lost 1.0%.