Market update: Investors cautious ahead of US data surge – 21.10.2013

The S&P 500 Index reached a record high on Friday (+0.7%; Dow Jones +0.2%), boosted by encouraging Chinese GDP growth and as the US government emerged from its partial shutdown. The 16-day shutdown has had the effect of making investors believe that the US Federal Reserve will delay its tapering into early 2014. Corporate earnings also lent support to the market. Google’s results surprised to the upside, with shares of the internet search company breaching the $1,000 mark for the first time (+13.8%). Morgan Stanley and General Electric were also among the day’s outperformers, the former reporting a 50% rise in quarterly revenue while the latter showed improving profit margins despite revenues falling.

This morning European shares are hovering around five-year highs (FTSE Eurofirst 300 +0.1%; FTSE 100 +0.2%). Although better than expected revenues from AkzoNobel and an almost tripling in quarterly net profits for Philips have set the bar high today, investors are adopting a cautious tone given a busy economic calendar this week. The US shutdown caused delays to its official data reporting, which will result in a surge of releases as the week progresses – the most notable of which is the delayed September Employment Report, which is due tomorrow. US existing home sales data is scheduled for today; analysts are expecting a fall of 3.3% month-on-month in September, reversing after the prior 1.7% increase.