Market update: Fed reassurance the markets, China manufacturing grows

US markets were buoyed yesterday by a reassuring statement from the Federal Reserve, which said it would stick to its bond-buying stimulus programme as unemployment remained high, while being mindful of the associated risks of its policies. In stock news Oracle fell 8.2% after it reported revenue that missed expectations, while FedEx Corp lost 6.9% following a cut in its full-year forecast and a reduction in quarterly profits. On Wednesday the S&P 500 ended three days of weakness by gaining 0.7%, the Dow Jones added 0.4% while the Nasdaq was 0.8% higher.

An upbeat report on China manufacturing revealed a pick up in the sector. The HSBC Flash China Manufacturing PMI rose from 50.4 to 51.7 in March, more than analysts’ expectations. Despite recording a trade deficit for the eighth month running, the Nikkei was the strongest market in Asia, ending Thursday up 1.3%. Japanese exports fell 2.9% year-on-year in February; this follows a strong 6.3% rise in January. According to analysts, it will take time for exports to benefit from the depreciating yen, which has been driven by prime minister Abe's push for more aggressive monetary easing. The Shanghai Composite closed up 0.3%, however the Hang Seng lost 0.1%.

This morning European markets are dipping: the FTSE Eurofirst 300 is 0.5% lower while the FTSE 100 is down 0.6% at the time of writing. Disappointingly, the Markit Flash Eurozone Purchasing Managers’ Index (PMI) Composite Output Index fell from 47.9 in February to 46.5 in March, signalling further contraction in business activity in the region. Yesterday, UK Chancellor George Osborne’s 2013 Budget speech revealed a corporation tax cut, national insurance breaks for small companies and assistance for home buyers. The growth forecast for 2013 was cut from 1.2% to 0.6% while public borrowing would rise more than forecast, to £114bn in fiscal year 2012-13.