Market Update: Tapering worries continue to trouble markets – 20.08.2013

Source: Henderson Global Investors

Monday was another day of declines for Wall Street as shares dropped for the fourth straight session on concerns for an imminent reduction in monetary stimulus or ‘tapering’, which investors perceive might lead to higher interest rates. The S&P 500 fell the most, down 0.6%; the Dow Jones index shed 0.5%, while the Nasdaq lost 0.4%. The latter made inroads earlier in the day spurred on by gains in technology shares such as Apple and Google but succumbed to selling pressure in the last hour of trading. Banks led the decliners in the S&P 500. JP Morgan shares fell 2.7% on reports of improper hiring practices in Hong Kong.

Thailand, Southeast Asia’s second largest economy contracted by 0.3% quarter-on-quarter in the second quarter. This follows the 1.7% decline recorded in the first quarter of the year as weak exports and lacklustre domestic demand hit the former emerging market ‘darling’. The Shanghai Composite, Nikkei and the Hang Seng all closed lower on Tuesday, falling 0.6%, 2.6% and 2.3% respectively.

This morning European stocks are also lower, as markets await tomorrow’s release of the latest Federal Open Market Committee meeting minutes for more clues on tapering by the US Federal Reserve. At the time of writing the FTSE Eurofirst 300 is down 0.9% and the FTSE 100 has retreated by 0.8%.