Market update: Slight improvement in sentiment: a firmer tone, particularly in EM – 29.08.2013

Source: Henderson Global Investors

US equities finished higher on Wednesday, led by gains in energy shares as rising oil prices prompted investors to buy oil stocks on fears of supply interruptions from the Middle East. Chevron and Exxon Mobil shares rose 2.5% and 2.3% respectively, providing the biggest boost to both the Dow Jones index, up 0.3%, and the S&P 500 index, also up 0.3%. News of a decline in existing home sales, which fell more than expected for a second straight month in July, also took the pressure off Federal Reserve tapering concerns. Further clues on the latter will come today with the release of data on US economic growth and jobless claims.

With the US setting a firmer tone, despite lingering geopolitical concerns, Asian markets reversed some of their recent losses overnight helped by a pull-back in oil prices from a six-month peak and signs of stabilisation in the region’s battered currencies. The Indian rupee came off a record low as the central bank offered dollars directly to oil companies; a source of major dollar demand in the spot market. This morning in European trading, the positive mood has continued. At the time of writing the FTSE Eurofirst 300 is up 0.5%, while the FTSE 100 has gained 0.6%; the latter helped by strong gains in Vodafone, WPP and Melrose stocks.