Spreadex Market Update
UK GDP beats estimates in Q2, but reading likely bears little relation to post-Brexit economy
With the Q2 figure coming in at 0.6% against the 0.5% forecast, and the 0.4% seen in Q1, the UK economy matched the growth seen in the final quarter of 2015. Yet it was hard to take solace in these figures; just because predictions of a slowdown pre-referendum appear to have been false, last week’s early glimpse at the Markit PMIs shows that the post-Brexit impact is in no way a bogeyman conjured by bitter Vote Remainers.
The fact that this Q2 reading is purely rear-view mirror stuff, and likely bears no relation to what will arrive with the third quarter figures in October, perhaps explains the muted reaction from the FTSE, which failed to substantially build on its early gains. The pound, meanwhile, continued to slide following yesterday’s dovish comments from MPC member Martin Weale, with sterling falling another half a percent against both the dollar and the euro (its losses against the latter significantly lifting the DAX and the CAC).
Those looking for excitement in the US open are likely to be disappointed, the Dow Jones futures currently pointing to a meagre 0.2% rise after the bell as investors avoid the index ahead of the Fed’s latest statement this evening. The Dow may still see some movement this afternoon, however, as it processes Apple’s third quarter earnings.
The tech behemoth rose nearly 7% after hours as it seemingly managed to negotiate the knife-edge expectations required to satisfy its fickle and flighty investors. Earnings per share beat estimates at $1.42, while revenue arrived a tad higher than forecast at $42.4 billion, more than half of which came from the sale of 40.4 million iPhones (again above the 40.02 million expected). Of course this still marks a notable decline year-on-year, and will hardly have silenced Apple’s rather gleeful detractors; yet, once you get beyond the bubble of Wall Street Apple is still a phenomenon, if one that doesn’t quite have the titan-like clout it had a couple of years ago.
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