Market update: Tapering cliffhanger: Fed decision awaited today at 7:00pm (GMT) – 18.12.2013

Source: Henderson Global Investors

Wall Street stocks ended Tuesday’s trading session slightly lower (Dow Jones 0.1%, S&P 500 0.3%). Investors were cautious awaiting the US Federal Reserve (Fed) decision on Wednesday as to whether it would begin trimming its $85bn-a-month asset purchases. Recent stronger-than-expected economic data has increased the odds that tapering could take place sooner; however, while a tapering decision is generally not anticipated at today’s meeting, the Fed is expected to signal that a move is imminent.

Asian markets have traded sideways overnight in low volumes as the Fed decision remains in focus. The exception has been Japan, where the Nikkei 225 gained 2% to a one-week closing high as investors decide that the Fed decision would have little impact on this market. Elsewhere in China, interbank lending rates jumped to a near six-month high, increasing concerns for tight credit conditions into the year end. European bourses edged higher this morning despite the tapering uncertainty. At the time of writing the FTSE Eurofirst 300 was up 0.6% while the FTSE 100 had gained 0.4%.