Archive for 2013

In the trading room today: Is the EUR Bound to Strengthen Further in 2014? As the December “europhoria” extends the single currency’s rally to a new two-year high against the U.S. dollar, we examine the factors fueling the euro’s gains and explore the potential for further strengthening of the single currency against the USD in 2014, we list the Top 10 spotlight economic events that will move the markets in the week ahead, we examine the consensus forecasts for the upcoming economic data, we analyze the latest trend developments in the EUR/USD currency pair, we continue to monitor the rally in the GBP/USD pair, we note the new multi-year high of the USD vs JPY, we highlight the market’s reaction to the statement by an ECB policy maker, the Japanese CPI and Retail Sales, we discuss new forecasts from Standard Chartered and UBS, and prepare for the trading session ahead.


In the trading room today: Can the USD Rally vs JPY Continue into 2014? With the USD registering a new five-year high against its Japanese counterpart, we take a close look at the USD and the JPY and examine the factors that could continue to fuel the greenback’s rally well into 2014, we analyze the bullish momentum in the USD/JPY currency pair, we keep an eye on the range-bound price fluctuations of the EUR/USD pair, we note the renewed strengthening of the GBP vs USD, we highlight the market’s reaction to the Bank of Japan Meeting Minutes, the U.S. Jobless Claims and Consumer Sentiment, we discuss new forecasts from Bank of Tokyo-Mitsubishi and Mizuho Bank, and prepare for the trading session ahead.

In the trading room today: EUR, USD and JPY New Trading Week Outlook. As volume and volatility in the currency market decrease as the Christmas holiday nears, we examine next week’s light on economic data calendar and explore the outlook for the EUR, the USD, the JPY and other currency majors, we list the Top 10 spotlight economic events that will move the markets in the week ahead, we examine the consensus forecasts for the upcoming economic data, we analyze the latest trend developments in the EUR/USD currency pair, we keep an eye on the GBP/USD pair, we continue to monitor the rally of the USD vs JPY, we highlight the market’s reaction to the Bank of Japan interest rate announcement, the U.K. and the U.S. GDP reports, we discuss new forecasts from Bank of Tokyo-Mitsubishi and Credit Suisse, and prepare for the trading session ahead.

In the trading room today: Is a Fed Taper Already in the USD Price? In the aftermath of the Fed’s decision to reduce the size of its monthly asset purchases to $75 billion, we examine the strengthening of the USD and explore what the future might have in store for the greenback’s exchange rate against the EUR and other major currencies, we analyze the test of a support area for the EUR/USD currency pair, we take a close look at the GBP/USD pair, we note the new multi-year high for the USD vs JPY, we highlight the market’s reaction to the FOMC monetary policy announcement, the U.K. Retail Sales, the U.S. Jobless Claims and Existing Home Sales, we discuss new forecasts from BNP Paribas and UBS, and prepare for the trading session ahead.

European stock markets jump 1% after Fed Chairman Ben Bernanke announces stimulus program will be slowed, and Nikkei hits a six-year high. Why tapering hasn’t caused alarm? Banking union breakthroughs- analysis from Brussels…


Powered by article titled “European and Asian markets rally after Fed’s dovish taper — business live” was written by Graeme Wearden, for on Thursday 19th December 2013 15.37 UTC

Time for some afternoon fun, or head-scratching: our Bumper Christmas quiz.

It’s packed with witty, taxing brain-teasers from the news in the last 12 months.


Afternoon summary

Time for a catch-up. European markets have risen sharply today as the Federal Reserve’s historic move to start winding back on its huge stimulus programme was greeted calmly by investors around the globe.

With Japan’s Nikkei hitting a six-year high overnight, the initial reaction to the winding back of America’s quantitative easing programme is positive — particularly as the Fed was more upbeat about the US recovery.

Expectations that EU member states will sign off on a new banking union deal at a two-day summit in Brussels starting today has also reassured European traders.

By cutting its bond programme by just $10bn (starting in January), and reiterating that interest rates won’t rise, the Fed maintained a dovish stance despite finally deciding to slow the pace of money printing.

If the US economy avoids a shock, the Fed might not cut its bond-buying programme to zero until next October, or even 12 months time. Should new problems arise, it could slow or stop tapering.

The benchmark indices are all up over 1% in afternoon trading, while the bond and currency markets remain calm.

Mike van Dulken of Accendo Markets coined it:

The bearded one has delivered his pre-Christmas rally! However, it wasn’t the bringer of children’s toys but the US Fed chairman with his economic optimism-driven taper of QE3.

The FTSE 100 is up around 60 points at 6557. Premier Asset Management fund manager Chris White reckons it will now end the year strongly:

I think the momentum is likely to continue into the year-end. The FTSE should end 50-100 points higher from here.

The Fed’s decision to reinforce its pledge not to raise interest rates before the recovery is entrenched also cheered the City — and reminded us that the Bank of England might need to tweak its own forward guidance.

Ashraf Laidi, chief global strategist at City Index in London, explains:

The Federal Reserve has successfully integrated the price stability component of its dual forward guidance into traders’ psyche by further delinking tapering of asset purchases from tightening conditions in the bond market.

The US dollar has strengthened through the day, helping to drive down the gold price. The pound has dropped to $1.635, a fall of 0.2%.


Elsewhere, our Europe editor Ian Traynor has warned that EU leaders face a tricky Summit in Brussels, given Germany’s ongoing demands for tighter controls on weaker members of the eurozone.

There are also austerity protests in Brussels, with farmers blocking roads and erecting fires.

The Chinese central bank has launched an emergency liquidity programme to avert fears of a cash crunch.

Greece’s jobless rate has dropped slightly….

…and Ireland’s economy has posted rollicking growth in the last quarter.


Hats off to Alex Barker of the Financial Times for this graph explaining why Europe’s new rules for closing a failing bank might be a little, er, convoluted.

Calm start on Wall Street

Over on Wall Street, the opening bell has just been rung and trading is under way….

…and there’s a ‘Now what?” feeling on the trading floors. The main indices have all dropped slightly, with the Dow Jones index shedding 0.1%.

Not a surprise, really, as the Dow and S&P 500 both surged to record highs last night as Wall Street gave a thumbs-up to the Fed. The surprise rise in weekly jobless benefit claims is also weighing on shares…

Hmmm, this wasn’t in the plan. The weekly US jobs data this lunchtime showed that the number of Americans filing new claims for unemployment benefit has hit a near-nine month high.

The number of initial claims rose by 10,000 last week to 379,000. Now, this weekly data is volatile (affected by seasonal factors and the weather) but it’s not exactly a peachy sign – especially as claims also rose last week.

Economists had expected the weekly total to fall by around 35,000 to 334,000.


Economics editor Larry Elliott reckons that Ben Bernanke had one eye on the history books when he announced that the Fed would taper its bond buying next month, at his final press conference as chair.

The outgoing chairman of the Fed, an expert on the economic policy blunders of the 1930s, has pursued an ultra-stimulative approach in his determination to avoid a second Great Depression. But he does not want to be blamed, as Alan Greenspan was, for creating bubbles by leaving too much stimulus in place for too long. He can now say that he initiated the winding down of QE before handing the reins over to Janet Yellen.

Does the Fed’s decision have ramifications for other central banks? Not really, because all the major economies are at different stages of the economic cycle and have their own particular challenges to address. The one common factor is that central banks are winging it. Zero interest rates and QE were the response to a sluggish recovery, a broken financial system, heavily indebted consumers and the threat of deflation. But having created a world of stimulus junkies, central bankers are faced with the tricky decision of how to reduce the dosage. The answer from the Fed is plain: slowly and with great caution.

More here: Federal Reserve starts taper – and avoids Wall Street bloodbath


Photos: EU Summit

Over in Brussels, EU leaders arriving for their final summit of 2013 will be greeted by a large banner reminding them that Latvia joins the eurozone fold in two week….

Meanwhile, those anti-austerity demonstrators have been getting the attention. Two protesters wearing Angela Merkel and Jose Manuel Barroso masks have been displaying a banner wishing the leaders a “Merry crisis and a happy new war”.

As explained earlier, the summit is meant to finalise new banking rules to prevent a new crisis….

The Bank of England (BoE) may be watching today’s market reaction with particular interest.

The Federal Reserve has managed to ‘sugarcoat’ the tapering by hardening its forward guidance on interest rates – saying they could remain untouched “well past the time” that the US jobless rate hits its 6.5% threshold, especially if inflation remains low.

In the UK, the jobless rate (7.4%) is likely to hit the BoE’s 7% threshold much earlier than its original estimate of 2016. Governor Mark Carney regularly states that the 7% is not a trigger — might the BoE eventually toughen up his own language?

Jane Foley, top currency strategist at Rabobank, reckons it might. She says:

Just as the Fed has altered its forward guidance this week, there is speculation that the BoE may have to follow suit….

We currently anticipate the first BoE rate hike in May 2015. Give the buoyancy of most UK data releases, the market will start to bring forward its expectations for a hike unless the Bank acts to contain speculation.


All quiet in the emerging markets…..


Intriguing moves in China today, where the central bank conducted an emergency short-term injections of funding into the country’s financial system.

The People’s Bank of China also gave banks more time to apply for funds, in a bid to calm fears that cash could run short in the run-up to Christmas.

Those concerns had been fuelled by PBOC itself, which has been withholding new liquidity in recent days in a bid to tighten credit. That drove up the rates at which banks were prepared to lend to each other.

My colleague Heather Stewart has been looking into it, and reports:

Echoing similar measures it took in June, the People’s Bank of China took the unusual step of announcing, via Weibo, the Chinese equivalent of Twitter, that it had carried out a short-term liquidity operation, or SLO. Trading was also extended by an extra half an hour, to allow banks to benefit from the measure.

No details were published about the scale of the SLO, or which banks had been involved; but the liquidity injection evoked memories of the crisis measures taken by central banks in Europe and the US in the wake of the collapse of Lehman Brothers, as markets threatened to dry up.

Mark Williams, of consultancy Capital Economics, said: “The story of the past few months has been that the PBoC wants to tighten monetary conditions to slow credit growth, and that’s been happening in fits and starts.”

 More here: China’s central bank acts to avert short-term credit crunch

There’s a good take on the FT too: Central bank acts to ease China cash crunch fears

Over to our Springfield correspondent

This cartoon is doing the rounds again — highlighting the difference between merely buying fewer bonds with newly made money, and actually selling them or raising interest rates.


The Wall Street Journal has a good round-up of City reaction to the Fed’s tapering.

It confirms that the modest pace of the move (just $10bn in January), and the new commitments to keep interest rates low, have calmed investors’ fears

‘Clear Message Received’: European Investors React to Fed Tapering

Here’s a flavour:

Sandra Holdsworth, portfolio manager at Kames Capital, which manages £53 billion of assets:

“It’s only a small reduction in the pace of purchases, which is why risky assets haven’t reacted negatively. The FOMC statement also reflects the market’s view on the outlook for the U.S. economy more closely, which is a big relief. We remain positive on peripheral markets while we expect Treasury yields to rise over the next 6-9 months but only modestly, as a rise in medium and long-term yields will encourage some investors to move further out the yield curve.”

Neil Wilkinson, a senior fund manager at Royal London Asset Management, which oversees more than $73.5 billion of assets:

“It’s a clever move from the Fed. On balance it is a surprise that tapering occurred now, but emphasising the data-dependency of future tapering, and reiterating that it is not just the headline unemployment figure that they are focusing on but a number of measures, allows them to anchor expectations that rates will remain lower for longer, and that tapering will not be aggressively applied.”

In Greece, meanwhile, the unemployment rate fell slightly in the third quarter of this year, but remains depressingly high.

The jobless rate inched down to 27%, from 27.1% in April-June. It was still higher than a year ago (24.8%), and more than twice the eurozone average (12.1%).

The unemployment rate for women remains considerably higher than for males (31,3% versus 23.8%), Elstat reported.

And the youth unemployment rate was 57.2%

Irish economic growth picks up

Just in: Ireland’s economy posted surprisingly strong growth in the third quarter of the year.

It’s good news for Dublin in its first few days since exiting its eurozone bailout.

The central statistics office reports that Irish gross domestic product increased by 1.5% in the July-September quarter. GNP (which strips out the impact of multinationals) jumped by 1.6%.

Consumer spending picked up by 0.9%, but exports shrank by 0.8% — perhaps due to weak demand from euro neighbours.

Growth in the second quarter was also revised upwards (Q2 GDP up to +1.0%, from +0.4%; Q2 GNP up to -0.1% from -0.4%).

The CSO reported strong growth in many industries, saying:

Distribution,transport,software and communication increased by 2.1 per cent in volume terms between the second and third quarters of 2013.

Industry (including Building and construction) increased by 2.2 per cent and Other services increased by 1.2 per cent in volume terms on a seasonally adjusted basis over the same period.

On the other hand Public administration and defence decreased by 1.0 per cent and Agriculture, forestry and fishing declined by 2.9 per cent between the second and third quarters of 2013.

Here’s the full details.

Photos: protests in Brussels ahead of Summit

Hundreds of protesters have blocked traffic around the site of the European Union summit in Brussels, in an anti-austerity protests.

Farmers are leading the protests. Tractors and bales of hays obstructed entry to the main road leading up to the EU headquarters in Brussels during morning rush hour on Thursday, only hours before the leaders open their summit.

Wooden pallets were set ablaze at one road to block traffic.

Bruno Dujardin of the CNE union said the demonstrators are seeking:

A Europe for the people, which respects the workers and allows all European workers to have decent working conditions.

(Via AP).


Ian Traynor: EU leaders look to strengthen the euro

Back to the EU leaders summit in Brussels which kicks off shortly.

Europe editor Ian Traynor explains that leaders will attempt to finalise crucial measures on banking reform to strengthen the single currency. At the heart of the issue is Germany’s insistence that weaker nations should commit to make structural reforms, and that the cost of bank rescues should not be shared too widely.

Here’s a flavour:

European leaders gather in Brussels on Thursday for a two-day summit aimed at shoring up the euro, pooling economic reform efforts and entrenching a radical new regime for controlling most of the eurozone banking sector.

The summit begins after late-night negotiations in Brussels saw finance ministers thrash out a complicated compromise deal that left national governments ultimately responsible for bailing out their banks.

Taken together, the policies amount to the biggest moves attempted by the 17 governments of the single currency since the euro and sovereign debt crisis exploded four years ago. The action being plotted is highly contentious, the policies are divisive. The main issue is what chancellor Angela Merkel of Germany wants, what she does not want, and what she might get in the end.

“They are trying to solve a German problem,” said a senior EU official.

Here’s the full analysis:

European leaders gather for summit after complicated banking compromise

And Rob Wood of Berenberg is concerned that UK retail sales volumes have risen by just 0.7% since July:

Retail sales are the one data reading not signalling runaway growth in the UK.

Indeed, they point to a notable cooling since the summer, in contrast to all the business surveys.

That 0.3% rise in UK retail sales in November suggests shoppers were handing back for bargains as Christmas gets closer, says economics editor Larry Elliott 

And with real wages still falling, households have a good reason to approach the festive season cautiously.

Howard Archer, UK economist at IHS Global Insight, reckons:

With purchasing power being limited by consumer price inflation running well above earnings growth for a prolonged period, it is likely that many people have felt the need to control their spending after spending at a rapid rate in the third quarter.

While shares rise, bonds are calm. The Fed appears (at pixel time) to have begun the process of slowing its purchases of US government debt without driving down prices (and thus pushing up borrowing costs).

British gilts (debt issued by the UK) have dropped a little in value, pushing up the effective interest rate on 10-year UK bonds to 2.94% from 2.92% yesterday. But such a small move shouldn’t cause any alarm.

European stocks at two-week high

Back in the markets, the index of major European companies has climbed to a two-week high.

The rally is still being driven by last night’s Fed decision and its commitment to hold borrowing costs down until well into 2015 (see opening post onwards for details).

The FTSEurofirst 100 is up 1.4% this morning to its highest level since early December, led by blue chip companies like Axa, IG and Deutsche Telecom (all up over 2.75%).

Daniel McCormack, strategist with Macquarie, explains that investors are reassured by the Fed:

The overall announcement is not as hawkish as it first appeared. As the Fed announced the taper, it also pushed out expectations for when it is going to lift the policy rate.

Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, agreed:

By tapering now, Bernanke has taken away quite a bit of the short-term market risk. He took away with one hand some of the stimulus, but gave it back by the other by stressing that short-term rates won’t go up for a longer period.

A small gobbet of UK economic news — retail sales rose by 0.3% in November, boosted by increased sales of warm clothes as the weather turned more wintery. That’s in line with forecasts.

The big question is whether December is proceeding as well as hoped. Some analysts are worried, sending Marks & Spencer and Debenham’s shares sliding yesterday.

EU ministers reach agreement on banking union

While attention was on the Fed last night, European finance ministers were hamming out a crucial deal on banking union, ahead of a European summit today and tomorrow.

Important breakthroughs were made in the early hours of this morning. EU ministers agreed a broad agreement for an an agency and a €55bn fund to shut troubled banks as soon as the European Central Bank starts to police them next year.

As Reuters explains:

European leaders, who will gather in Brussels later in the day, will sign off on it and the final touches will be made in negotiations with the European Parliament next year.

“The final pillar for the banking union has been achieved,” Germany’s Finance Minister Wolfgang Schäuble told journalists.

But…. there are concerns that the new framework may not be nimble enough to deal with a failed bank (18 member countries need to be consulted).

And Germany also refused to allow the Eurozone’s bailout fund to be used to rescue a failing bank directly. Instead, if funds aren’t available elsewhere (either via the €55bn fund or the taxpayer), a country would have to make the request itself.

Our Europe editor Ian Traynor explains that ministers were under pressure to raise a deal before EU leaders start their own two-day summit today.

He writes:

There will be big problems with getting the deals agreed with the European parliament, and with national ratifications of a new treaty between participating governments on the funding of banking resolution.

The French-led group of southern countries, the European commission and the ECB opposed this.

“It’s a choice between a banking union that’s not perfect, or nothing,” said a senior EU official.

Leaders are heading to Brussels now — David Cameron and Enda Kenny have paid an important visit to Flanders first.

The gold price just dropped to a new five-month low of $1,200/ounce, pushed down by the stronger dollar and renewed optimism over economic prospects


Mike van Dulken of Accendo Markets, agrees that the Fed’s upbeat view of the US economy, and its renewed commitment to record low interest rates, is calming fears in the markets.

Finally, he adds, investors see tapering as an positive sign that conditions are improving, rather than fretting about less easy money next year.

The Fed’s move has been driven by improved US data (jobs, growth, spending, investment) and political progress (note the senate passed the bipartisan budget overnight), and balanced by a reinforcement of forward guidance that interest rates will stay very low for a ‘considerable time after QE ends’ and until unemployment falls below 6.5%’.

The dovish boost to forward guidance has served to reassure markets (as the Fed will have hoped) that stimulus-tapering does not equate to true policy-tightening, with emphasis that sub-target inflation remains a concern, that future decisions will remain data-dependent and that it can adjust to changing conditions [ie,by pausing the taper].

Full round-up of the European markets

Definitely a rally across Europe:

  • FTSE 100: up 72 at 6564, + 1.1%
  • German DAX: up 127 points at 9309, +1.39%
  • French CAC: up 60 points at 4170, +1.5%
  • Spanish IBEX: up 209 points at 9,650, +2.2%
  • Italian FTSE MIB: up 267 points at 18,398, + 1.4%

Robin Bew of the Economist Intelligence unit predicts that the Fed’s move could cause some alarm in emerging markets (EMs) next year…..

While Société Générale analysts reckons there will be fewer jitters than last summer, when the prospect of tapering hit markets hard (although predictions of EMageddon proved wide of the mark)

FTSE early risers

Here’s the full list of top risers on the FTSE 100, which has settled around 1% higher as European markets join the Fed-inspired rally. No sign of taper trepidation yet….

The Santa rally?

Ishaq Siddiqi of ETC Capital reckons the “Santa rally”* has finally begun, and welcomes the news that the Fed is finally slowing its stimulus plan:

The Fed made the right call to start tapering, removing much of the uncertainty in the market of the timeline in which it will consider taking action.

This should in turn remove much of the volatility that we have seen in the final quarter of 2013, gearing us up for a delayed but eagerly anticipated “Santa Rally” to finish this year in a bang and kick of the next year in an upbeat fashion.

The US economy is improving… the euro zone is in a better shape than it has been in over 3 years, Japan’s economic policies are taking effect, China has a long term growth plan in place and the UK’s economy is performing better than policymakers even anticipated – the world is not in a bad shape at all so there’s much to cheer about.

* – markets traditionally romp ahead in the final days of the year

Shares rise…..

Europe’s stock markets are open, and shares are indeed rising.

The FTSE 100 is up 60 points in 6552, a gain of 0.9%, led by Prudential (up 2.5%) and BAE Systems (2%).

The other main markets are also up at least 1%, as European traders take the taper in their stride.

Why shares aren’t tumbling

For months, we’ve spoken about QE being a punchbowl that central bankers were reluctant to take away. So why didn’t markets tumble last night on the news that the Fed was finally tapering?

Three reasons:

1) at $10bn, this is a relatively gentle taper. If the Fed continued cutting at that rate, it wouldn’t stop buying bonds until beyond next summer (October) or even December (updated)

2) the Fed has said it would change the rate if conditions deteriorate;

3) and it has also indicated that interest rates will remain at record lows for more than another year.

Stan Shamu of IG fleshes this out:

Firstly, the Fed reinforced its low Fed funds rate outlook with the key line being ‘it likely will be appropriate to maintain the current target range for the federal funds rate well past the time that the unemployment rate declines below 6.5%’. With inflation remaining benign, the majority of Fed members expect the first rate hike in 2015.

Secondly the tapering amount has been deemed by many analysts as a ‘token taper’ and essentially just allows the Fed to test the waters and assess conditions further.

Thirdly, the taper has been on the back of rapidly improving conditions while the Fed reinforced that asset purchases are not on a pre-set course and will be adjusted accordingly. On this notion we can only assume that if conditions worsen, the situation will be adjusted accordingly. All things considered, a solid economic improvement for the US will help the global recovery along and ultimately company earnings along with equities.


Here’s the details of the rally in Japan overnight, from Reuters:

Japan’s Nikkei share average rose to its highest close in six years on Thursday on the back of a big drop in the yen after the U.S. Federal Reserve announced it would start unwinding its historic stimulus.

Japanese equities were bolstered by a surge in the dollar/yen to over five-year highs in the wake of the Fed decision, underscoring the benefits of a weak currency for Japan’s export-reliant economy.The Nikkei added 1.7% to close at 15,859.22, its highest close since Dec. 2007.

During trade, it rose as high as 15,891.82, a hair’s breath away from its May high of 15,942.60. It was a third day of gains for the Nikkei.The Topix gained 1.0% to 1,263.07, with all of its 33 subsectors in positive territory.

Volume was high, with 2.9 billion shares changing hands.The Fed said it would reduce its monthly asset purchases by $10 billion to $75 billion, and indicated that its key interest rate would stay at rock-bottom even longer than previously promised.


Fed gives markets the Christmas spirit

Good morning. World stock markets are set to rally today today after last night’s historic decision by the Federal Reserve to begin scaling back its huge stimulus programme.

The move to begin tapering the Fed’s $85bn per month bond-buying programme by $10bn in January, alongside a new pledge to keep interest rates low for an extended period, is being taken as a sign of renewed confidence in the US economy.

After five years of unprecedented stimulus measures on both side of the Atlantic, the Fed’s move is a landmark moment in the financial crisis. The $10bn cut is being seen as a modest start to tapering, lighting the blue touchpaper under market optimism.

Japan’s stock market has hit a new six-year high overnight, and the Australian market jumped 2% (as mining stocks rose on the back of economic optimism).

We’re expecting a strong start to trading in Europe — with the main indices tipped to rise almost 1% — after Wall Street hit a record high last night.

Although the Fed is starting cautiously, it sees signs of underlying strength in the US economy – and believes it can cope without such huge monthly injections of fresh money. We’ll find out over time if it’s right, and what the implications for the world economy will be.

As Wall Street correspondent Dominic Rushe explained last night:

Ben Bernanke, entering his final days as chairman of the US central bank, surprised many economists who had expected the Fed to wait until the new year to “taper” the so-called quantitative easing (QE) stimulus program.

But following a series of strong jobs growth numbers the Fed’s open markets committee said “cumulative progress” had been made in the US’s economic recovery and it was scaling back its $85bn a month bond-buying programme to $75bn.

“In light of the cumulative progress toward maximum employment and the improvement in the outlook for labour market conditions, the committee decided to modestly reduce the pace of its asset purchases,” the Fed said in a statement.

At a press conference Bernanke said he expected the Fed to take “similar moderate steps” throughout 2014, suggesting the programme could end by late next year. However he cautioned that the Fed would halt the cutbacks if the economic indicators worsened.

More here: Federal Reserve to taper economic stimulus on heels of strong jobs growth

Emerging economics could still be watching nervously, as the recent inward flow of capital could reverse, and their currencies could weaken. But there’s been no panic in emerging markets yet…..

And with UK unemployment falling so much yesterday, and European ministers hammering out the details of banking union overnight (of which more shortly), 2014 looks a little less daunting….

Here’s the opening calls from IG:

  • FTSE: 6555, +63 points
  • Germany’s DAX: 9267, +85
  • France’s CAC : 4150, +40
  • Spanish IBEX: 9536, +92
  • Italian MIB: 18272, +141

I’ll be tracking reaction to the Fed’s move, and other key developments, through the day….

Updated © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.