Market update: Cautious mood; dollar up, gold down, rumours of Larry Summers for next Fed chairman – 13.09.2013

Source: Henderson Global Investors

In the US, the S&P 500 index snapped a seven day gain on Thursday closing down 0.3%, while the Nasdaq and Dow Jones followed suit by falling 0.2%. A drop in precious metal shares dragged mining shares lower on the day. A more cautious mood has descended upon the markets before next week’s US Federal Reserve (Fed) meeting. Consensus among economists is for a $10bn monthly reduction in the pace of the Fed’s asset purchases. Disappointing eurozone industrial production data has also been a dampening factor, as well as the looming fiscal battles in Washington.

Asian markets were mostly lower overnight following the negative lead from the US. Hong Kong, China and South Korea fell 0.5%, 0.8% and 0.5% respectively, but the Nikkei bucked the trend rising slightly by 0.1%. The dollar continued to gain strength having its best session in more than a week. The dollar index, a measure of strength against a basket of currencies, rose 0.2%. Interestingly, Japan’s Nikkei newspaper reported that President Obama was about to nominate Larry Summers as the next Fed chairman as early as next week. European shares were seen heading lower this morning, awaiting developments next week and US retail sales today. In early trading, the FTSE 100 pulled back from a one-month high, with the heavyweight mining sector dragging on the index as precious metals continued to weaken. At the time of writing, the index had lost 0.2%, while the FTSE Eurofirst 300 was down 0.1%.