Market update: Markets still sliding on QE tapering worries – 13.06.2013

Source: Henderson Global Investors

US stocks dropped on Wednesday in another volatile day of trading (Dow Jones and S&P 500 both -0.8%, Nasdaq -1.1%) as concerns about the potential tapering of the US Federal Reserve’s quantitative easing programme continued. This uncertainty has caused market volatility, as gauged by the CBOE Volatility Index (VIX) to jump up by more than 20% this week.

The misery continued in Japan on Thursday, where the Nikkei 225 fell 6.5% after the yen hit a 10-week high against the US dollar. The plunge puts the Nikkei into bear market territory, often defined as a 20% fall from an index’s recent peak – the Nikkei has fallen 22% since hitting a five-year high in May. In response to the overnight tumult in Asia, European shares have dropped sharply at the open, falling 1.3%. The FTSE 100 was down 1.2% at the time of writing, while the FTSE Eurofirst 300 was down 1.3%. Frankfurt’s DAX and Paris’ Cac 40 were down 1.9% and 1.0%, respectively. Shares in Royal Bank of Scotland dropped 7% following yesterday’s surprise announcement that CEO Stephen Hester is stepping down. Investors are wondering who would step in to steer the part-nationalised bank through to an eventual privatisation.