After a relatively strong couple of years of performance, equity markets have started 2014 uncertainly and the Federal Reserve’s announcement of a further $10 billion reduction in its quantitative easing programme prompted consolidation. The S&P 500 has dropped from around 1,831 points to around 1,751 points since the beginning of the year, whilst the FTSE 100 is down to a level of around 6,458 from around 6,717. In tandem the Volatility Index (VIX) has risen from around 14% to nearly 20%. Additionally, recent corporate earnings reports have revealed that earnings growth remains subdued and this could constrain markets as the easy money from quantitative easing begins to dry up in the wake of tapering.
February 10th, 2014, by Phil Bennett