Market update: Investors reluctant to act while awaiting significant monetary developments – 21.05.2013

Source: Henderson Global Investors

Wall Street shares, still hovering near their cyclical highs, shed some of their recent gains on Monday (Dow Jones 0.1%, S&P 500 0.1%) as uncertainty over when the Federal Reserve (Fed) might begin to unwind its $85bn-a-month quantitative easing programme affected sentiment. Markets now await some clarification, if any, from the Fed chairman at his Congressional testimony on Wednesday. The losses, however, mask gains in intraday trading prompted by a flurry of acquisitions, amongst which Yahoo’s $1.1bn cash deal to buy blogging network Tumblr.

Overnight, Asian shares were mixed following the weaker US session. With the Japanese yen still in focus, and the Bank of Japan conducting a two-day meeting, which ends on Wednesday, gains in Japanese shares were limited. The picture in Europe is also mixed this morning; in early trading the FTSE 100 index was up 0.1% while the FTSE Eurofirst 300 shed 0.1%. The fall in European stocks, from their 2008 highs, followed the news that Carnival, the world’s largest cruise operator had lowered its forecasts, sending its own and other travel companies’ shares lower.