Spreadex Market Update
US GDP misses fourth quarter estimates but fails to deter end of January gains
Coming in at a lower than expected 0.7% (compared to the 0.8% forecast), the US Q4 GDP figure failed to disrupt the markets this Friday, with the country’s annual rate at 2.4% for 2015, matching the expansion seen in 2014. That’s certainly better than the year-on-year decline seen in the UK, which saw its annual growth fall from 2.9% to 2.2%, perhaps explaining why investors were unperturbed by the slight miss in the fourth quarter figure. Or perhaps the positive reaction is due to the fact that the slowing Q4 growth likely ensures no further rate hikes form the Fed this year. Either way the Dow Jones opened around 190 points higher, recovering the ground the futures had lost at lunchtime and then some, ignoring a widening goods trade deficit to instead focus on a far better than expected Chicago PMI (at 55.6 against 42.9 last month).
The FTSE was the most consistent of the major indices this Friday; shrinking the least from the initial post-BoJ interest rate surge during the midday wobble, the UK index returned to its earlier highs after the US open, jumping 2% to re-cross the 6000 mark. Of course a near 3% rise from Brent Crude (closing in on $36 per barrel in the process) only helped matters, even if there was a creeping red hue to the mining sector as the day went on.
Like their US and UK peers the Eurozone exploded into life this afternoon, returning to the forceful growth seen in the early hours of the European session. The DAX lifted 1.5% whilst the CAC, aided by a year-on-year improved GDP figure, surged 1.7%.
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