Spreadex Market Update
UK Q4 GDP beats G7 peers, but decent headline figure masks troublesome interior
Firstly, at 2.2% for 2015 compared to 2.9% in 2014, the country still saw a worrying slowdown last year, regardless of whether it performed better than its G7 peers. Then there is the fact that growth is still disproportionately reliant on consumers, the services sector surging 0.7% compared the stagnant manufacturing sector (Osborne’s march of the makers apparently coming to a complete stand still). Completing the sour undercurrent to the superficially impressive headline figure was the trade deficit, which widened from £14.7 billion to £16.6 billion quarter-on-quarter. Nevertheless the number was enough for the FTSE to increase its gains to 130 points, the index continuing to receive the double bump of a dividend lifted Lloyds and a verdant commodity sector.
The Eurozone’s data was similarly problematic this Thursday; whilst, at 0.3%, the region-wide inflation figure was at its highest point since just before the Grexit crisis last summer, this still marks a drop from the initial 0.4% (and 15 month high) reading. Yet the DAX and CAC remained buoyant, rising just over 1% and 2% respectively; if anything the underperforming figure has helped the region in its gains, investors’ hopes of an extra injection of ECB stimulus in March only heightened by the downward inflation revision.
Whilst the European indices are striving to regain the losses they incurred on Wednesday the US markets are looking far more muted this Thursday, the Dow Jones currently set for a meagre 20 point increase when the bell rings on Wall Street. Whether or not the US index joins the European rebound is likely to be dictated by the pre-open data. The durable goods orders are expected to bounce back to 3% after last month’s -5.0% , whilst the core figure is forecast at 0.2% against last month’s -1.0%; the jobless claims, meanwhile, are expected to rise back to 271k from last week’s 3-ish month low.
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