Market update: US stock markets shrug off tapering talk; European markets patchy this morning – 11.11.2013

Source: Henderson Global Investors

A much stronger-than-expected US jobs report on Friday, showing 204k jobs were added in October along with upward revisions to the last two months, sent US Treasury yields soaring (prices fell) as expectations were raised that the US Federal Reserve (Fed) is now closer to begin tapering their asset purchases and that interest rates might go up sooner than expected. Stocks, however, closed up (S&P 500 1.3%, Dow Jones 1.1%) in a sign that perhaps the stock market has detached itself from the tapering argument, and instead is focusing on stronger economics.

Asian markets have traded mixed overnight on Monday. Higher yielding emerging markets were mostly lower on concerns for capital outflow as the Fed begins to reduce stimulus, which would likely result in a sell-off in risk assets. Developed Asian markets fared better; in China, hopes are raised for potential reforms to emerge out of the plenary meetings, expected to conclude tomorrow. Economic data released over the weekend was also reassuring; October’s industrial production rose more than expected at 10.3% year-on-year (Shanghai Composite 0.2%, Hang Seng 1.5%). A sharply weaker yen against the US dollar helped the Nikkei to close up 1.3%. In Europe this morning, markets are patchy but there are some positive pockets as some European stocks gained on China’s upbeat industrial production. At the time of writing both the FTSE Eurofirst 300 and the FTSE 100 indices were flat.