Markets

Stock markets soft as growth data disappoint

Published April 28, 2017 Updated April 28, 2017 02:41pm

Wall Street opened on the weaker side after data showed that the US economy expanded by just 0.7 percent in the first quarter, well below analysts' expectations and a three-year low.

The mood in New York was further soured by political concerns as the US government tries to avoid a shutdown, said analysts at Charles Schwab, also pointing to tension over North Korea.

London's benchmark FTSE 100 index was also down as data showed a slackening in Britain's crucial service sector had slowed GDP growth to 0.3 percent -- in early signs that the country's post-Brexit vote boom may be coming to an end.

"With high inflation and slumping consumer demand, there is much to worry about with the UK economy at present," said David Lamb, head of dealing at FEXCO Corporate Payments.

Banking giant Barclays weighed down on the index following the publication of first-quarter results, which showed its investment banking operation "fell short of expectations due to weaker than expected fixed income trading", according to Helal Miah at The Share Centre.

- Mixed eurozone data -

Prospects for British exporters were also hit by the surging pound, which climbed to its highest since late September on Friday, approaching $1.30.

Traders are betting on a thumping victory for Theresa May in the upcoming general election, which they believe will help her in Brexit negotiations.

France also posted disappointing GDP growth of 0.3 percent, but Paris's CAC index was steady, holding on to gains from its post-election bounce as polls showed centrist Emmanuel Macron on course for victory.

The first-round vote had been "a massive relief to markets, which are assuming that Macron is going to win", William Hamlyn, analyst with Manulife Asset Management, told AFP.

Germany's DAX took comfort from Eurostat announcing that eurozone inflation rose to 1.9 percent in April, up from 1.5 percent in March.

"Any inflation that's marginally above expectation would help Europe and the reflation story," said Hamlyn.

Despite the jump, the European Central Bank has reasserted its commitment to a loose monetary policy.

 

- North Korea tension -

Asian shares earlier fell as doubts deepened over US President Donald Trump's agenda.

"The market's distrust in his ability to run the government is only increasing," Mizuho Bank said in a commentary.

"He has not been able to deliver most of his campaign promises. The market has had high hopes for his tax reforms. But the proposal has faced strong criticism from the conservative forces in his party that are demanding more fiscal discipline."

Also, there are concerns that Washington lawmakers have yet to pass a bill before Saturday that will prevent a costly shutdown of the US government, with Democrats and Republicans unable to agree even a short-term deal to give them more time.

 

- Key figures at 1350 GMT -

London - FTSE 100: DOWN 0.3 percent at 7,213.40 points

Frankfurt - DAX 30: DOWN 0.1 percent at 12,432.39

Paris - CAC 40: FLAT at 5,272.15

EURO STOXX 50: DOWN 0.1 percent at 3,561.07

New York - Dow: DOWN 0.1 percent at 20,960.77

Tokyo - Nikkei 225: DOWN 0.3 percent at 19,196.74 (close)

Hong Kong - Hang Seng: DOWN 0.3 percent at 24,615.13 (close)

Shanghai - Composite: UP 0.1 percent at 3,154.66 (close)

Euro/dollar: UP at $1.0912 from $1.0872 at 2100 GMT

Pound/dollar: UP at $1.2925 from $1.2902

Dollar/yen: UP at 111.49 yen from 111.24 yen

Oil - Brent North Sea: UP 40 cents at $52.22 per barrel

Oil - West Texas Intermediate: UP 38 cents at $49.33

Copyright AFP (Agence France-Press), 2017