UK subject to surprise downward GDP revision
After a relatively slow start to the day, markets accelerated higher from late morning, with major European indices finishing more than 1.5% higher by the closing bell. It came despite little in the way of political development out of last night’s informal EU gathering (hopes for which had pushed markets up and then back down again in recent days), and a raft of pretty lousy economic announcements.
For the UK, a second reading of first quarter growth surprised on the downside, showing that the UK had contacted 0.3% in the three months of 2012, below the 0.2% fall indicated in the flash reading. A reduction in construction output was largely to blame, with a drop of 4.8% representing the biggest decline in three years. It came during a week in which the IMF recognised the need for reducing the country’s deficit, but also recommended some form of boost to the economy, whether in the form of an interest rate cut or more quantitative easing.
Similar disappointing news was evident across the continent, with a German Ifo business climate index, a business expectations survey and manufacturing PMI all coming in below expectations. Whilst initial jobless claims came in as anticipated in the US later in the day, core durable goods orders were down 0.6% over the month, well below the 0.9% increase that was anticipated.
The FTSE100’s 84 point (1.6%) gain to 5350 was possibly a result of bargain hunting, with the heavy selling of stocks in the last few weeks representing a decent entry point and attracting buyers for whom decent investment returns are hard to come by. Whilst Europe finished higher, major US indices were marginally lower at the time of writing, following a relatively strong end to trading last night.
This was posted in Bdaily's Members' News section by James .