Closing post
Time to wrap up - here are today’s main stories:
Goodnight. GW
European market close
Stocks in Europe have ended the day higher, despite the suprise fall in US economic growth last quarter.
In London, the FTSE 100 closed 84 points higher at 7,509, up 1.1%, led by Standard Chartered (+14%), Aveva (+6.75%) and Whitbread (+4.3%).
Germany’s DAX (+1.35%) and France’s CAC (+1%) also gained.
David Madden, market analyst at Equiti Capital, says the announcement the US economy contracted at an annual rate of 1.4% in the first quarter of this year was a big surprise.
It is worth remembering the economy expanded by 6.9% in the final quarter of last year, so it is a major deceleration.
Two consecutive quarters of negative growth defines a technical recession. Keep in mind, the Russian invasion happened more than halfway through the first quarter, so if the first three months saw a negative reading, it does not bode well for the second quarter. Despite the pull back, the US dollar is still up 0.5% on the day, which speaks volumes about the strength of the currency. In light of the -1.4% growth report, the Fed might look to rein in its hawkish commentary because negative growth and higher borrowing costs is not a good combination.
