Börse & Märkte

Stocks Drift Lower; Fedspeak Shakes Up The Market

Stock markets in Europe flipping between small gains and losses as investors continue to ruminate over this year’s biggest question in the market so far; taper on or taper-off?  On Monday, Fedspeak influenced price-action in US markets as Dallas Fed Head Fisher said that with the unemployment rate edging lower to 7.4%, the Fed is ready to pull the trigger on reducing asset purchases.

 

The US ISM non-manufacturing report meanwhile smashed through expectations, confirming that the country’s services sector continues to pick up steam. Services sector is a big driver for the US recovery so the strong data point on Monday left investors feeling confused as it was being weighed up against the mixed nonfarm payrolls report out last Friday.

 

Traders are none the wiser over tapering and will continue to speculate in the run up to the September FOMC meeting, displaying hypersensitivity to economic data in the process. We must also not forget that we are contending with depressed summer volumes and elevated prices on major indices which provide traders the perfect excuse to take cash off the table. The S&P500 is up near 20% year-to-date, currently above the 1700 mark it broke above for the first time ever in its history last week.

 

Some constructive macro data in the form on UK manufacturing and industrial output helps to steady markets on Tuesday. UK data points to more encouraging signs that the country has found its path to sustainable recovery. BOE’s Inflation Report now the next key risk-event in the UK, due Wednesday.

 

Speaking of central banks, the Aussie RBA slashed interest rates by 25 basis points overnight, a move regarded as dovish and critical in stemming the weakness in the Aussie dollar. The USD meanwhile gains pace following the upbeat services report, hitting commodity prices which weigh on resource stocks in Europe. Looking ahead, little on the US macro plate other than trade data – Fedspeak will be stealing the spotlight again with Chicago Fed head Evans taking the mic to offer his views on the US economy and the Fed’s monetary policies.