Market update: Japan’s aggressive monetary policy action wins support 19.04.2013

Source: Henderson Global Investors

US stocks closed lower on Thursday (S&P 500 -0.7%, Dow Jones -0.6%, Nasdaq -1.2%) following the release of more bearish economic reports and some less favourable earnings releases. The Conference Board Index of leading economic indicators fell by 0.1% in March (February +0.5%) suggesting US growth remains slow, while weekly initial unemployment claims rose slightly more than expected to 352,000 (forecast 350,000). Several earnings releases also came up short of expectations, among them were Morgan Stanley and IBM.

Most Asian markets closed higher today, with Chinese stocks leading the region (Shanghai Composite +2.1%, Hang Seng +2.3%, Nikkei 225 +0.7%). The yen depreciated further against other major currencies after the G20 group of developed nations appeared to accept that Japan’s bold monetary policies were put in place to fight deflation, rather than to promote yen weakness.

European stocks are up this morning (FTSE Eurofirst 300 +0.5%, FTSE 100 +0.2%), likely taking a cue from a rally in Asia. Miners are bucking recent weakness; Anglo American is higher after reporting that first quarter output increased across most commodities. The German parliament has approved the €9bn bailout package for Cyprus and the country’s lawmakers also approved the seven-year loan extensions that were granted to Ireland and Portugal. UK March retail sales declined by 0.7% compared to a month ago as sales suffered from the unusually bad weather, however first quarter sales fared better, up 0.4% compared with the final quarter of 2012. In earnings news, German software company SAP is down after first quarter revenue came in below market expectations.