London View
Disappointing US data further impact weak financial markets
Disappointing first quarter revisions to US growth slapped sentiment Wednesday afternoon, weighing on financial markets already fearful of a prolonged crisis in Iraq as violence escalates.
US GDP showed worse than expected figures, contracting 2.9% at annual pace, which is worse than the 1% contraction in the second estimate. That’s the worst quarter for the US since the first three
months of 2009 after the financial crisis of 2008.
Much is attributed to the severe weather conditions in the US together with general loss of momentum in most indicators during the period. Traders are expecting a rebound in the US for the second
quarter, sparked by improving jobs market – the positive for markets after this GDP release is that it pushes the Federal Reserve further away from raising interest rates early next year.
Traders are now of the view that possibly rate hikes are off the cards until end of 2015 at least. All major benchmarks in Europe declined with the Stoxx Europe 600 index falling by 0.7%. The
FTSE100 index and DAX30 also posted modest losses for the session – Asian markets fell overnight on the back of weakness in on Wall Street on Tuesday.
Lesen Sie auch
It may be that ahead of the end of the second quarter and an escalation in violence in Iraq where militants are tightening their grip on major parts in Iraq. Militants are gaining strength through
a Sunni uprising against the Shiite-led government.
Conversely, there was a bit of rebound for Dubai’s General Index today after tumbling 13% in the previous three days with many citing a correction induced by geopolitical tensions in Iraq. It’s not
only Iraq though with Ukraine/Russia crisis still chipping away at market sentiment.
Ukrainian President Petro Poroshenko called for immediate talks with Russia, Germany and France after pro-Russian rebels shot down a government helicopter. The US is already preparing tougher
sanctions on Russia in an attempt to push for further destabilisation of the situation while German chancellor Angela Merkel said that threat of economic sanctions on Russia will be on the table at
the EU summit.
US stocks kicked off the session lower on the downbeat GDP figures, Iraqi violence and the general decline across global equities. That came despite durable goods orders data from the US climbing
in May, showing increase corporate investment.
Bookings for non-military capital goods excluding aircraft rose 0.7% after a 1.1% drop in April – a better than forecast outcome. Other data from the US wasn’t so positive with a MBA mortgage
applications dropping 1% in the week to June 20.
Aktuelle Themen
4 im Artikel enthaltene WerteIm Artikel enthaltene Werte