Market update: Is the US economy healthy enough to taper? – 06.11.2013

Source: Henderson Global Investors

Global stockmarkets were mixed yesterday, flitting between optimism and uncertainty after faster-than-expected expansion in US service sector figures stoked speculation over whether the US Federal Reserve might opt to taper its monetary stimulus measures. The Dow Jones closed down 0.1% at 15,618, ahead of tomorrow’s release of third quarter GDP figures, and Friday’s jobs data. The S&P 500 slipped back 0.3% to 1,762 – still within touching distance of the record high of 1,771 reached on 29 October.

In Asia, the Nikkei 225 in Tokyo rose 0.8% overnight, with yen weakness helping to support profits for exporters, and on positive news from car manufacturer Toyota which raised its full-year profit forecast. Less positively, the Shanghai Composite slipped 0.8% despite China’s state-owned oil major Sinopec’s $17bn plan to boost the domestic stock market by repurchasing its own shares.

 European equities started the day in an upbeat fashion. At the time of writing, the FTSE Eurofirst 300 and the FTSE 100 were up 0.4% and 0.1% respectively. Investors have generally been quite bullish, with UK investors responding positively to another strong economic report in the UK yesterday, with the service sector PMI figure of 62.5 well ahead of the predicted 60.0.