Overnight, the Nikkei closed down 1.14% as stronger-than-expected new home sales in the US triggered fears that the central bank might reduce its stimulus package. Ben Bernanke of the Fed stated there is no set timescale for cutting back the bond-buying scheme, but a recent survey conducted by Bloomberg pointed out that 50% of economists surveyed believed that tapering will begin in September.
Stocks are in the red this morning despite positive economic announcements from the UK and the eurozone, which tells us that the Fed’s activity has the biggest impact on investor sentiment.
The German IFO business sentiment came in at 106.2 in July, a third consecutive monthly rise. The UK preliminary gross domestic reading (GDP) reading came in at 0.6% for the second quarter of 2013, but this failed to lift investor confidence due to thinking that a stronger British economy might encourage the Bank of England to cut its stimulus package.
At 1.30pm (London time), the US’s jobless claims and durable goods reports will be revealed. If the figures are better-than-expected we could see equities fall further.