Spreadex Market Update
Eurozone sees GDP halve quarter-on-quarter; US Q2 reading set to improve on woeful Q1 growth
Given the state of the stagnant French GDP figures this morning the Eurozone will likely take the 0.3% growth it managed in the second quarter. That is, however, half of what it produced in Q1, suggesting that either the region was impacted by the run-up to the Brexit or, more likely considering how the UK avoided a pre-referendum slump, has more than a few problems of its own to contend with. Nevertheless the DAX seemed vaguely pleased by the news, rising around 25 points, though the CAC remains in the red following France’s country-specific GDP fluff.
The FTSE, meanwhile, continued to loiter around 6710 this morning, dragged lower by its oil and mining stocks. Brent Crude led the entire commodity sector lower with a near 1% fall, a fall that leaves the black stuff hovering just below $43 per barrel. Royal Dutch Shell was the worst hit, dropping nearly 2%, though part of that decline is likely due to residual queasiness from yesterday’s eye-watering 71% plunge in Q2 profits.
The day’s GDP excitement doesn’t end with the Eurozone; no, the US wraps up the week-long party with its own sector quarter figures this afternoon. Following the dismal 1.1% (at the annualised rate) in Q1 analysts are expecting a big recovery from the US economy, with the Q2 preliminary reading set to arrive at 2.6% (roughly 0.65% growth on a quarterly basis). The Federal Reserve’s fairly hawkish, or at least not-dovish, statement on Wednesday, one that left a potential September rate hike on the table, should make the reaction to today’s GDP reading interesting. The Dow Jones could well see its week-long slide intensify if it chooses to take a stronger GDP figure as another green flag for an interest rate rise, with futures already suggesting a 25 point fall after the open.
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