Market update: Investors cautious ahead of Fed’s policy statement – 31.07.2013

Source: Henderson Global Investors

A number of encouraging quarterly earnings reports helped support Wall Street yesterday (S&P 500 +0.04%; Nasdaq +0.5%; Dow Jones -0.01%), despite investor nervousness ahead of the Federal Reserve’s policy decision and US second quarter (Q2) gross domestic product data, due for release later today. Goodyear Tire & Rubber shares gained nearly 9% after the company more than doubled its quarterly profit. Technology shares also outperformed as investors continued to buy into Facebook: its stock is up 40% since announcing (last week) that its mobile advertising revenue had rocketed 75% in Q2.

Overnight, the Shanghai Composite gained 0.2%, led by property shares, after the Politburo pledged to focus their policies on achieving steady expansion in the second half of 2013. Investors are interpreting this as a sign that the leadership will not introduce new measures to restrict home demand. However, markets have opened cautiously across Europe this morning (FTSE Eurofirst 300 flat). German retail sales unexpectedly fell in June, down 1.5% from May on a seasonally-adjusted basis, suggesting that doubts over the euro area’s health have been weighing on consumer spending. In London, Centrica, the owner of British Gas is outperforming (+1.5%) following a 2% rise in first half earnings. Yesterday it agreed to buy US oil group Hess for in excess of US$1 bn (FTSE 100 +0.4%).