Market Update: No new clues from Fed minutes; markets slip on continued tapering concerns – 22.08.2013

Source: Henderson Global Investors

The release of the US Federal Reserve’s minutes of the July policy meeting, did not yield any new clues as to when they would begin tapering their bond-buying programme. It only revealed that officials are broadly comfortable with Ben Bernanke’s plans. This led to volatility in equity markets. All major US indices traded down on Wednesday: Dow Jones -0.7%, S&P 500 -0.6% and Nasdaq -0.4%. The main laggards were the high yielding utilities and telecom sectors. US Treasury yields were back up as prices fell. Higher interest rates further unnerved emerging markets.

The trading pattern in the US was followed through in overnight trading in Asia. Even the news of improving activity in Chinese factories failed to lift the sombre mood. The HSBC Flash Purchasing Managers’ Index (PMI) improved to 50.1 in August from 47.7 in July, the largest monthly gain in three years. The 50-point mark separates expansion from contraction. European trading is more positive this morning with both the FTSE Eurofirst 300 and FTSE 100 indices up 0.7% at the time of writing, cheered by the Chinese PMI data but also on news that German manufacturing expanded at a faster pace than expected.