Market update: Weak Chinese data weighs on markets – 03.06.2013

Source: Henderson Global Investors

Wall Street finished the week negatively on Friday, the S&P 500 down 1.4% (Dow Jones -1.4%) as fears about when the US Federal Reserve might taper asset purchases coincided with mixed economic data and the rebalancing of the MSCI indices (stocks entering and leaving the index). While US business activity rebounded in May – boding well for manufacturing this quarter – consumer spending fell for the first time in a year, down 0.2% in April month-on-month. Weaker demand for utilities and less money being spent on fuel was responsible for the decline.

European markets have dropped this morning (FTSE 100 -0.9%; FTSE Eurofirst 300 -1.0%), taking their cue from the US last week, but also dragged lower by disappointing Chinese factory activity data. The HSBC/Markit purchasing managers’ index fell to 49.2 (a reading of less than 50 indicates contraction) in May. At the sector level, pharmaceutical stocks are among the underperformers after drugmaker Sanofi stopped work on two drugs in late-stage development.