Morning Spread

Morning Spread

Thursday 12th December 2013
IndexLevelChg (%)
UK Market6480.45-0.42
Dow Indust Avg15843.53-0.81
S&P 5001782.22-1.13
Nasdaq Composite4003.811.40
Nikkei 22515341.82-1.12
Hang Seng23218.12-0.51
IndexLevelChg (%)
Nymex 1m97.42-0.02
Gold Spot1251.80-0.04
GBP/USD1.6416+0.14
GBP/EUR1.1911-0.29
EUR/USD1.3780-0.16
USD/JPY102.85+0.42

The US equity market was weak on Wednesday as rumours increased that the Federal Reserve could announce the beginning of the tapering policy next week. Most indices moved more than 1% lower, appearing to contradict the normal ‘Santa rally’. Volatility levels have been at very low levels in recent months but the VIX climbed 11% on the day. Cisco Systems fell 1.6% after it lost a court case regarding the previous merger of Microsoft and Skype. The EU General Court found that it did not restrict competition. Positive news from MasterCard saw the shares gain 3.5%. The company increased the dividend and also approved a major share buyback. The only other gainers were the usual defensive stocks such as Altria up 0.94% and Coca Cola up 0.70%. Notable fallers included Pfizer down 2.2%, Alcoa down 2.3% and Morgan Stanley down 2.1%.

Asia followed the US markets lower with exporters such as Li & Fung down nearly 5%. Chinese property developers were also weak amongst fears of a bubble, China Resources Land was down just over 3% and Shimao Property declined a similar amount. A major profit warning from Japanese chemical company, Nitto Denko, saw the shares decline nearly 20%. The company cited weak demand from China for TV and Tablet films. The pain continued for QBE Insurance in Australia with the shares losing another 5.5% after Fitch cut the credit rating.

Europe is also moving lower as investors try to lock in profits for the year. Fertiliser company, Yara International, is 2% lower on overseas currency movements with a high exposure to the volatile and weak Brazilian Real. Financials are lower with ING down 1.1% and Credit Agricole down 1.4%.In Germany, Metro is up 2.6% after announcing earnings that beat expectations and improved cash flow, leading to significantly reduced debt. In the UK, oil services company John Wood Group are down 10.6% after a profit warning. Retailer, Sports Direct, is down 4% after results which were not as positive as some analysts expected.