Market update: Rotation out of interest-rate sensitive stocks coincide with US sell-down – 06.06.2013

Source: Henderson Global Investors

US equities extended their losing streak yesterday, the S&P 500 falling 1.4% (Dow Jones -1.4%) in a broad-based sell-down. Concerns over the US Federal Reserve tapering its asset purchase programme appear to be causing investors to sell out of interest-sensitive stocks which has coincided with a rise in US Treasury bond yields (falling prices).

A mixed batch of US economic data only provoked more investor confusion. The latest ADP employment data was below expectations: private sector jobs rose 135,000 in May versus expectations for 170,000 with April’s figures also revised slightly lower. New orders for factory goods, while higher over April (+1.0%), failed to reverse the prior month’s plunge (-4.7%). That said, orders for non-defense capital goods (seen as a measure of business confidence) increased 1.2%.

In London, the FTSE 100 is in positive territory (+0.2%) at the time of writing, steadying after a 2.1% loss yesterday. Investors are cautious ahead of policy decisions from the Bank of England and European Central Bank later today. European markets are edging higher despite an unnerving technical problem at electronic exchange Euronext earlier this morning, which delayed the opening of some securities trading in Paris, Amsterdam, Brussels and Lisbon.