29th May 2014 - Global Economic Update
Global Market Data as of 29th May 2014
FTSE 100 6,871.29 (+0.29%) Dax 9,938.90 (-0.00%)
CAC 40 4,530.51 (-0.02%) BEL 20 3,162.09 (+0.15%)
Madrid IBEX 10,734.80 (-0.21%) Zurich SMI 8,706.50 (-0.04%)
Moscow MCIEX 1,446.96 (+1.63%) Sydney ASX 5,473.80 (-0.46%)
Nikkei 225 14,632.38 (-0.34%) Hang Seng 23,061.04 (+0.22%)
Shang SSE Comp 2,040.88 (+0.01%)
Dow Jones 16,698.74 (+0.39%) NASDAQ 4,247.95 (+0.34%)
S&P 500 1,920.03 (+0.54%)
Markets in Asia started out positive following on from another bumper day in the US yesterday. The gains made by morning trading had leveled out by the afternoon session however with the Hang Seng and the SSE Comp being two of the major indexes to stay in the green as the week and month drew to an end. The Nikkei lost its early gains as data released on Consumer Prices started to take effect. Japan has been struggling with deflation for almost 20 years and after their Sales Tax hike last month, Consumer Prices rose their fastest in 23 years in April seeing a 3.2% increase over a forecast 3.1%. This is the eleventh month in a row that prices have risen and although this is expected to continue, the Japanese Government hopes that this will force consumers to spend now rather than later as they see the cost of goods going up. Japan is facing an increased old aged population and the stresses of paying for the elderly and the cost to social services is seen as a major issue in the coming years which the local government is now addressing as it looks to rectify the downturn in its economic progression.
European markets are continuing their good spell as many of the major indexes flirt with year highs and all time highs. With the impending June 5th European Central Bank meeting in Frankfurt looking like it will shine a light on the planned stimulus we can expect European markets to be positive today as the month closes out and anticipation of good news from Mario Draghi next week drives the markets forward. In the UK, businesses are feeling more optimistic according to two of the leading business lobbying groups. Both the BCC and CBI stated that growth in the UK is outpacing what was previously reported. The British Chambers of Commerce has revised it growth forecast for 2014 from 2.8% to 3.1% being its highest since 2007 and the Confederation of British Industries commented that growth reached a record high in May, its best performance since 2003 when data started to be collected. Both lobbies quoted confidence in the UK economy, ease of access to credit and better global conditions as key factors however the crisis in the Ukraine and how Russia may act; along with the United Kingdom's exposure to countries in the EU which are under-performing economically are risks to performance.
US markets continue to lead the way, despite some economic data coming in under expectations. Data on GDP showed the first contraction in three years. The US economy contracted by just 1% in the first quarter of 2014, a significant swing from the 2.6% expansion seen in the last quarter of 2013. Analysts had forecast a 0.5% contraction as they accounted for the inclement weather seen at the beginning of the year. It has been estimated that the weather cost the US almost 1.5% of GDP for the first quarter. This news did little to affect the markets as all three major indexes pushed forward and the S&P again hit a record close, its third out of the last four sessions. This positivity was helped by a reduction in the numbers of unemployment claims. Forecast at 318,000, the figures came in at 300,000, a drop of over 27,000 on April. Consumer spending also beat expectations with a 3.1% increase. More indicators are due later today, Personal Income and PCE Price Index will be reported along with a some localised PMI reports.
May has been a surprising month for the markets. Considering the issues in Ukraine, Libya, Syria and the growing territorial disputes in South East Asia, the global economy continues to expand. All eyes are looking to the ECB to calm nerves and follow through with their eagerly awaited stimulus plan.
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