Global stock markets went soft yesterday, weighed down by disappointing American and British growth figures, with eurozone inflation data offering a bright spot on the macro-economic front.
Wall Street was a touch weaker after data showed that the US economy expanded by just 0.7% 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.
The US House of Representatives yesterday passed a one-week stopgap funding bill, which will now go to the Senate.
But strong corporate results, including from Amazon and ExxonMobil, kept a floor under the market.
“Markets were left a little unsure which way to turn after an upturn in corporate profits was met with data showing decelerating economic growth,” said Jasper Lawler, an analyst with London Capital Group.
London’s benchmark FTSE 100 index closed lower after data showed a slackening in Britain’s crucial service sector had slowed GDP growth to 0.3% — an early sign 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.
The FTSE 100 was 0.5% down at 7,203.94 points, Frankfurt’s DAX 30 was 0.1% down at 12,438.01 points, Paris’ CAC 40 slipped 0.1% at 5,267.33 points and the EURO STOXX 50 dropped 0.1% at 3,559.59 points at close.
Banking giant Barclays weighed down on the index following 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.
Prospects for British exporters were also hit by the surging pound, which climbed to its highest since late September yesterday, 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%, but Paris’s CAC index still held on to most 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% in April, up from 1.5% in March.
Despite the jump, the European Central Bank has reasserted its commitment to a loose monetary policy.


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