Equities pause on lack of fresh data

Tuesday, December 10, 2013

US equity markets extended the previous week’s gains with the S&P 500 closing at a record high, adding 0.18% throughout the day as investors continue to weigh positive economic data against the timing of tapering. The DJIA closed flat despite spending the majority of the session in positive territory, at one point pushing past 16,050. US markets have performed well throughout 2013 with equity indices holding firm around current levels in recent weeks as steady improvements in the housing and labour markets support risk assets. St Louis Fed President James Bullard outlined in a presentation yesterday that while an improvement in labour conditions increases the likelihood of tapering, cuts should be modest owing to persistently low inflation. According to Bloomberg Bullard stated that “should inflation not return toward target, the committee could pause tapering at subsequent meetings.”

Asian equities struggled with directions during overnight trading despite US investor bullishness as the lack of fresh economic releases from the US kept investors side-lined. The Nikkei pared Monday’s gains, closing 0.25% lower while the TOPIX added 0.1% throughout the session. Investors have already taken the bullish US jobs data into consideration, with attention now switching back to the domestic market where President Shinzo Abe is struggling to approve further consumption tax increases and stimulate growth. The yen pushed back above 103.00 against the dollar after strengthening towards 101.70 at the start of the month.

The RICS house price index has risen to its highest level in over ten years as government schemes to boost buying coupled with supply shortages support higher prices. The RICS housing market survey increased to 58 in November from 57 the previous month, a level last reached in June 2002 with the institute going further to state that house prices are likely to push higher if homebuilding efforts aren’t ramped up.

The Chinese yuan has pushed to a two decade high, approaching 6.0700 signalling policy makers are loosening their control on the currency with the hopes that it could ultimately lead to a free-floating exchange rate. With the trade surplus rising to levels last seen in 2009, pressure is on the PBOC to relax the trading range on the yuan which could see further appreciation. Recent sessions have seen significant appreciation in the currency as the central bank raised the yuan’s reference rate by 0.17% to 6.1130 per USD, the strongest rate since pegging against the dollar ended in 2005.

S&P 500 closes at record high as optimism increases

SPX Index SP 500 Index Daily 2013 12 10 07 49 16

JPY back above 103.00 as Abe attempts to spur growth

JPY Curncy Japanese Yen Spot 2013 12 10 08 11 50

RICS house price index rises to highest level in over a decade

UKRXPBAL Index RICS England W 2013 12 10 08 14 05

CNY pushes to 20 year high as trade surplus puts pressure on policy

CNY Curncy China Renminbi Spot 2013 12 10 08 20 10

Events for today: Tuesday, 10 December 2013

0530

CN

Nov

Retail Sales & Industrial Output

0001

UK

Nov

RICS House Prices

0930

UK

Oct

Trade Balance

0930

UK

Oct

Industrial & Manufacturing Output

1500

UK

Nov

NIESR GDP Estimate

1500

US

Oct

Wholesale inventories

1900

US

Oct

Federal Budget

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Topics: Nikkei, SP 500, JPY, CNY
More from: Kash Kamal