Nasdaq rocked by hotter-than-hoped US GDP report

US stocks turned lower once more on Thursday after US Q3 GDP data came in unexpectedly hot. The tech-heavy Nasdaq led the declines, tumbling as much as 4% before ending off the lows. The lower valuations for most FTSE 100 shares shielded the UK index from similar-sized declines but the index still closed lower after UK GDP missed expectations. A positive start is expected at the open on Friday in what will be a shortened trading session in The City.

Coming up

● US Q3 GDP data comes in hot
● FTSE nurses only small losses
● FX markets subdued

Noteworthy

- Star fund manager David Tepper says he’s ‘leaning short’ on equities
- US Senate passes $1.7 trillion government funding bill, teeing up House vote
- SBF Released On $250 Million Bond, Agrees To House Arrest In Parents House
- US core PCE inflation data is released at 1.30pm GMT

US Q3 GDP data comes in hot

For markets that are trying to price in economic and financial matters 12-18 months into the future, the data from July-September shouldn't have mattered, but it did. At least temporarily, the report again raised expectations for more Fed rate hikes and brought back all the old questions of high valuations, particularly in the tech sector.

US Q3 GDP came in at 3.2% y/y and well ahead of the prior reading of 2.9%. The numbers were taken at face value of meaning a stronger than expected US economy, though it remains to be seen whether the extra growth in Q3 pulled forward some of the growth in Q4, possibly implying a much sharper slowdown in the current quarter. Tesla was at the vanguard of the losses, shedding 9% as shareholders keep heading for the exit as the share price drops and as CEO Elon Musk seemingly directs all his attention at Twitter.

The passing of a massive $1.7 trillion spending bill appeared to support market sentiment into the close, though feelings are mixed among investors about whether the extra stimulus - much of which is going to defence - will be worth the inflationary implications.

FTSE nurses only small losses

European markets opened marginally higher Friday after ending in the red during the previous session. The FTSE retreated 0.4% to 7,469 on Thursday after economic data pointed to a growing
likelihood that a UK recession is already here. Reports of weak trading in London’s pubs and restaurants as a result of strikes weighed on publicly-listed Pub companies, J D Wetherspoon plc and Mitchells and Butler PLC.

FX markets subdued

US economic data came out stronger than expected, which should have helped support the dollar more than it did. However, lower FX market volumes before Christmas meant that the response was quite muted. EUR/USD and GBP/USD both closed lower on Thursday, forming ‘spinning top’ candlesticks that represent indecision around their December lows. USD/JPY finished flat just above 132 but is still down on the week after the BOJ policy change.