Market Update 20th June, 2013 Equities U.S. stocks fell sharply and Treasury yields surged overnight after Federal Reserve Chairman Ben Bernanke said the central bank may scale back its bond purchases this year, depending on the economic outlook. Benchmark indexes initially cleared their losses after the Fed ‘s policy statement, then fell hard as Bernanke said the Federal Open Market Committee currently anticipates moderating the monthly pace of purchases later this year, so long as incoming data supports the Fed’s forecast. In its announcement, the Fed said it would continue to purchase $85 billion in bond purchases each month, but noted that the outlook for the economy and the labour market has improved since the fall. The FOMC reiterated that it was ready to hike or cut the pace of its asset buys, depending on the labour market and inflation. Stocks, which were modestly lower before the decision, fell more after the statement and forecast. Extending its streak of triple-digit moves into a seventh session, the Dow Jones lost 206.04 points, or 1.4%, at 15,112.19. The S&P 500 index fell 22.88 points, or 1.4%, to 1,628.93 as telecommunication stocks paced declines among its 10 major sectors, with high dividend payers getting hit hardest as yields climbed. Forex The U.S. dollar rallied the most in two months versus the euro as Federal Reserve Chairman Ben S. Bernanke said the central bank could reduce its bond buying this year and end it in 2014 if economic improvement continues. The U.S. dollar strengthened 0.7% versus the euro to $1.3295, 1.2% to 96.45 Japanese yen and 3.1% to 92.65 Aussie dollars. New Zealand’s economic growth slowed more than economists forecast last quarter as the nation’s worst drought in 30 years curbed farm output. The kiwi fell after the data buying 78.56 U.S. cents from 78.88 U.S. cents.
Posted on: Thu, 20 Jun 2013 01:59:02 +0000
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