Market update: Merkel celebrates German ‘grand coalition’ – 16.12.2013

Source: Henderson Global Investors

US equities were little changed on Friday after declining for three sessions previously (S&P 500 -0.01%; Dow Jones +0.1%; Nasdaq +0.1%). It capped a very poor week for Wall Street, which has retreated on fears that the US Federal Reserve (Fed) may announce a tapering of its asset purchase programme at its policy setting meeting next week. Economic data on Friday was also uninspiring; US producer prices declined in November for the third month in a row. The report indicates that weak demand in the US and abroad is putting a lid on wholesale prices, keeping overall inflation below the Fed's 2% target. In stock news, Adobe Systems share price reached an all-time high as the software maker indicated success in moving its business to an internet cloud-based subscription model.

Over the weekend, in an unprecedented party referendum, Germany’s SPD party voted overwhelmingly to join Angela Merkel’s conservative CDU/CSU in forming a 'grand coalition'. The new government looks set to come into office this week after an anxious three-month wait following the German general elections. Both the FTSE Eurofirst 300 and FTSE 100 indices are flat at the time of writing, however, after Chinese manufacturing unexpectedly weakened to a three-month low in December, according to a preliminary survey by HSBC, and as ‘tapering’ fears dominate.