On Wednesday news was dominated by some bad figures from Germany and Britain, released this morning. Germany’s ifo-climate index, which consist of the two sub-indices the Current Assessment index and the German Business Expectations index, dropped sharply from 105.2 to 103.3 in July, missing expectation of a slight increase. The sub-index “Current Assessment”, which measures the current business conditions (without regarding expectations), fell from 113.9 to 111.6 whereas the other index “business expectations” shrank to 95.6 from 97.2 in the previous survey.
Other shocking data came in from Britain when the Office for National Statistics announced a further decline in Britain’s GDP (Quarter on Quarter) of 0.7% in the second quarter of the year following a 0.3% fall in the first quarter, greatly undershooting analyst’s forecasts that had anticipated a slightly better figure than in the first three month. The second quarter’s results resulted in a year on year GDP decline of 0.8%. A lost working day during the Queen’s diamond Jubilee, the eurozone crisis and terrible summer weather were highlighted as contributing to the disappointing picture.
Despite the bad statistics, the FTSE100 opened flat today and increased during the morning, trading almost 7 points (0.12%) up at 5506. Whilst the disappointing economic news wasn’t reflected in the stock market, Sterling fell to a 12-day low against the Dollar trading at $1.5474, and also fell0.5% against the euro 0.5% on evidence of a deepening recession?
Having risen through the morning, markets dipped towards the close, trading marginally into negative territory. The FTSE 100 finished the day flat at 5498, whereas the CAC40 and the DAX were up 0.2%. Gold rose $24.30 (1.5%) to 1,600.50/oz.