Market update: Nikkei finishes at six-year high – 28.11.2013

Source: Henderson Global Investors

Wall Street closed firmer yesterday (S&P 500 +0.3%, Dow Jones +0.2%, Nasdaq +0.7%). Among sectors, technology led gains while energy lagged. Investors were cheered by an upbeat consumer confidence report ahead of the seasonal shopping season; the Thomson Reuters/University of Michigan November consumer sentiment reading of 75.1 was better than the anticipated rise to 73.5. Also uplifting market sentiment was news that there were fewer initial claims for unemployment benefits in the previous week (316,000 compared with 326,000 the week before). However, on a negative note October durable goods orders declined 2% month-on-month owing to weakness in the defence and aircraft sectors.

Turning to Asia, Japan’s Nikkei 225 (+1.8%) closed at its highest level since December 2007 on Thursday. Exporters such as Hitachi, Panasonic and Sharp rallied following yen weakness against the dollar. Dollar-yen rose above 102, a six-month high. Also encouraging was news that October retail sales rose by an unexpected annualised rate of 2.3%, suggesting that household consumption is driving the Japanese recovery. Chinese stocks also joined the rally with the Shanghai Composite closing up 0.8%; China’s central bank governor has said that the authorities would speed up reforms to liberalise interest rates and achieve capital account convertibility. This morning, European equities have followed the US and Asia’s lead. The FTSE Eurofirst 300 and FTSE 100 are both advancing 0.4% at the time of writing. Political developments will be watched closely by investors, this includes the recently announced coalition deal in Germany and the expulsion of former Italian prime minister Silvio Berlusconi from parliament yesterday.