Market update: A positive start to the week with supportive data from China and Japan – 09.09.2013

Source: Henderson Global Investors

Friday’s release of the US August payrolls report, revealing fewer jobs added than expected (169k versus consensus of 180k), led to a choppy trading session on US financial markets. 10-year benchmark Treasury yields dropped around 10 basis points (bp) at first as their prices rose, but most of the gains were given up by the end of the day, leaving yields just 2bp lower. Stocks ended the session more or less flat (Dow Jones down 0.1%, S&P 500 flat) as concerns for the US Federal Reserve policy were eased but tensions regarding Syria remained firmly on the table.

Asian markets were cheered by the strong data and positive news out of China and Japan over the weekend, and overnight. Upbeat August trade and inflation data in China, reassuring markets on the health of the world’s second largest economy, sent Chinese shares to three-month highs (Shanghai Composite up 3.4%). In Japan, more positive economic news as Q2 gross domestic product (GDP) growth was revised upwards (to an annualised 3.8%) combined with the country’s winning bid to host the 2020 Olympics, boosting Japanese shares (Nikkei 225 up 2.5%). Elsewhere in the region, Australia’s national elections on Saturday resulted in a centre-right coalition, led by the Liberal Party’s Tony Abbott, sweeping to power. This morning in Europe, markets are broadly lower as improving data from Asia is offset by geopolitical tensions. At the time of writing the FTSE Eurofirst 300 has shed 0.1% while the FTSE 100 index is down 0.2%.