Market update: US Fed unable to agree on length of QE3

On Thursday, US equities closed lower. The S&P 500 and the Dow Jones were both down by 0.2% as investment optimism over the fiscal cliff deal dissipated. Yesterday’s US Federal Reserve (Fed) December policy-setting meeting minutes revealed that members were in disagreement over how long the Fed should buy bonds to lower long-term interest rates. An increase in construction hiring boosted private sector jobs in December, with the creation of 215,000 jobs; the expectation was for a much lower increase of 133,000. In stock news, shares in Google moved up following the end of an investigation into anti-trust violations. Off-price retailer TJX also closed higher after better-than-expected quarterly results.

This morning, European equity markets are slightly weaker following the Fed’s meeting minutes. The FTSE Eurofirst 300 and the FTSE 100 are both down 0.1% in early morning trading. Miners such as Randgold Resources and Lonmin are among the weakest stocks, while the more defensive pharmaceuticals, GlaxoSmithKline, Novartis and AstraZeneca are in favour. According to Markit data, UK services PMI fell into contraction territory for the first time in two years, from 50.2 to 48.9 in December.