Market Update: Investors reluctant to commit ahead of policy meetings – 05.11.2013

Source: Henderson Global Investors

US equities closed higher yesterday (S&P 500 +0.4%; Dow Jones +0.2%) in cautious trading. After four weeks of consecutive gains, and with indices hovering around all-time high investors appear to be hedging their bets ahead of Friday’s US Employment Report, which could provide clues as to whether the Federal Reserve could taper its asset purchases this year. All key S&P sectors moved higher, but energy and telecoms stocks were notable outperformers. In company news, BlackBerry sold off (-16.4%) after the company abandoned its $4.7 billion sale plan and its chief executive officer, Thorsten Heins, stepped down.

Overnight, Asian markets were mixed. Hong Kong’s Hang Seng Index dropped 0.7%, while mainland Chinese stocks rebounded (Shanghai Composite +0.4%). Suspense is building in the lead up to the Communist Party’s third plenary session of the 18th Congress – China’s political event of the year, which commences on 9 November. Australia’s S&P/ASX 200 climbed 0.8% after the Reserve Bank of Australia kept its benchmark interest rate unchanged at 2.5%.

European markets have turned negative this morning (FTSE Eurofirst 300 -0.1%; FTSE 100 -0.4%) having climbed to five-year highs at open. The European Central Bank’s policy announcement on Thursday is a cause of uncertainty, alongside some earnings disappointments from car maker BMW and insurer RSA. Elsewhere, UK retail sales data pointed to a slow economic recovery; the British Retail Consortium reported that like-for-like retail sales (strips out changes in floor space) grew 0.8% year-on-year in October, but below forecasts for 1.1% growth.