The Week in Review: 3rd – 7th June 2013
Wall Street spent most of last week playing a guessing game with the Federal Reserve, trying to decipher the underlying meaning and potential effect of comments made by Esther George. This was always on the cards with Ben Bernanke’s comments on 22nd May still fresh in the minds of investors. Naturally, with an $85bn a month cash injection into the worlds largest economy, markets across the globe have been keeping one eye on the events in the US and how they may unfold. One such example of this would be the sudden rise that the FTSE saw late on Friday in London, immediately after the US jobs data was released.
The FTSE 100 closed at 6,412, up from 6,027 at the turn of the year. The 10.97 percent rise has predominantly been driven by the monetary stimulus that has been provided by central banks across the globe. Along with all other major indices, concern has now been raised as to how far it could fall if that stimulus was to be removed as the Federal Reserve considers its options.
The Nikkei has seen a major shift over the last three weeks, with futures plummeting from 47 percent down to just 16 percent since Ben Bernanke’s comments. The volatility in the Japanese markets during this period has made it one of the most complex to trade recently, especially with the Yen getting weaker against the dollar before a massive reversal which saw it climb back past the 100¥ to the dollar during the last week.
On Wall Street the S&P 500 is 1.5 percent off an all time closing high but with so much uncertainty surrounding the nation’s economy it was always unlikely that it would break that record and maintain it. The index closed up on Friday, along with the DJIA and the Nasdaq, on the back of the non-farm payroll data released early in the day. Whether it will be able to carry that momentum into next week is open to debate but with little action taking place next week it does stand a fighting chance.
Some analysts are now suggestion that we have seen the back of correction. After the rally which ran from November to May, there were many overpriced stocks across the globe, which have now had adequate time to realign themselves. However you look at it though, it was most certainly a mixed week but not one that will be remembered in months, or even years to come.