Spreadex Market Update
US Q2 GDP sees big miss, drags Dow Jones back below 18400
Coming in at a dismal 1.2% at the annualised rate (i.e. 0.3% per quarter) the US Q2 reading was far lower than the 2.6% analysts had forecast. To make matters worse the first quarter figure, which was already sitting at a meagre 1.1%, was revised lower to 0.8% (the same level as the original preliminary reading earlier in the year). The Dow Jones, which has struggled to most of the week having hit its latest all-time peak last Wednesday, was understandably unimpressed, slipping another 75 points to dip below 18400.
The US GDP miss also impacted sentiment in Europe, which was already on shaky ground following the Eurozone’s growth glumness this morning. The FTSE (which has seen a 10.5% plunge from Pearson join the strain placed on the index by its red-washed commodity sector) and the CAC both fell around 0.5%, while the DAX sat flat on the day.
While the past GDP-dominated week hasn’t really yielded too much movement, things may well be different next week. Jitters will likely abound in the first half of the week, as investors prepare themselves first for a potentially rate-cutting ‘Super Thursday’ from the Bank of England, and then the US non-farm jobs report on Friday, which is back in the spotlight following Wednesday’s surprisingly upbeat Fed statement. Those two events could cause some big swings for the pound and, dependant on how robust Carney and co. are with their stimulus, may see the FTSE resume its climb towards 6800.
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