Spreadex Market Update
UK Q2 GDP in-line at 0.7%, but figures show economic imbalance
That GDP figure now sees the UK's economic output per person back near its pre-crisis peak. However, there were a few issues concealed within the attention-grabbing headline figure; progress continues to be almost solely based on consumer spending fuelling aggressive growth in the services sector. Construction growth was flat, agriculture shrunk by 0.7% and, most worryingly, manufacturing contracted by 0.3%.
Yet despite this economic imbalance (and the seeming abandonment of Osborne’s ‘march of the makers’ promise) the UK is on track, if it can maintain its current levels of growth, to top the G7 GDP list for the second year in a row. Combine this with the nascent recovery in the index’s oil and mining stocks (including BP), if the not the commodity stocks themselves, and the FTSE settled into a nice run of gains as the day went on.
With the UK GDP figures drawing most of the morning’s attention, the DAX and CAC could focus on regaining as much ground as they could before the spectre of Greece rears its ugly head once again. August 20th is still a relatively distant date, meaning the urgency that should be surrounding the third bailout negotiations hasn’t yet become manifest on the markets, likely to the relief of Eurozone investors.
The US futures followed the lead of their European counterparts this morning, as the Dow Jones aims to stall its run of 3 digit losses. Ahead of the FOMC statement on Wednesday the US will reveal its latest CB consumer confidence data this afternoon, with the number expected to remain marginally above 100. If it manages to match the current forecasts it would be the first back-to-back post-century consumer confidence figure since the middle of 2007, and would only increase the calls for a September lift-off in the process.
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