Europe
U.K’s GDP came out worse than expected at -0.2%
Americas
GDP disappointed, coming out at 0.4%
Existing home sales jumped by 6.54m
Daily Market Review Dec 23, 09
It was a GDP day yesterday, as two of the largest economies showed their growth results. The U.K took the stage first, showing negative growth of -0.2%. Even though the result didn’t deviate too much from the expected result of -0.1%, it was still better than the 2nd quarter’s result of -0.3%. The mild increase in economic growth was attributed to construction, which had increased in the third quarter.
The U.S also grabbed the spot light, prior to the opening bell, releasing their GDP and existing home sales figures. The final estimate for real GDP in the third quarter came in under expectations of at 2.2%, 0.6 percentage points lower than the preliminary estimate and an even more significant 1.3 points below the advance estimate. The details of the report revealed weakness in personal consumption, investments and government consumption. One must note that the two numbers from the U.S and the U.K spooked investors as the results showed that the largest economies are still dealing with a slow recovery.
Furthermore, the U.S released its existing home sales, showing that prices are now on the rise. The numbers jumped by 8.5%, 6.54M, presenting a sizeable increase, similar to October’s increase of 9.5%. It is important to note that when excluding one month of declines the housing market has been recuperating at a steady pace since April.
U.S stocks continued their climb higher despite the worse than expected GDP number and finished the session with gains. AIG increased by over 10% after it decided not to pursue an IPO for Chartis, its property and casualty division. Once again, yesterday’s session was characterized by a bounce at the start of the session, which then led to consolidation. Even though stocks continue to show resilience, gains are due to spikes at the start of the session and not continuous buying throughout the intraday sessions.
This time round, the Technology led the way higher, increasing by over 0.80%, while utilities dragged on the session, closing with a loss of -0.83%. The S&P500 finished the day with a gain of 0.36%.
Forex
On the Forex market, the Dollar index continued to gain strength, as investors saw further strength in the recent Dollar rally. Investors are now beginning to price in a change in the Fed’s policy, which is reflecting a stronger Dollar. Yesterday’s existing home sales number only strengthened recent thoughts, knowing that an improving economy will eventually lead to rate hikes.
On individual pairs, the EUR/USD and the AUD/USD continued their way lower, while the GBP/USD broke support and headed to lower ground. To date the GBP/USD seems to be heading towards its prior support level, located around $1.68.
The NZD also felt pressure as additional Dollar strength and a worse than expected GDP figure, pushed the NZD/USD lower. New Zealand reported that their economy had expanded less than expected at a rate of 0.2%, compared to an expected 0.4%. According to the Financial Times, economists noted there had been a particularly sharp fall in residential building in the latest quarter and that business investment and manufacturing had also been weak.
The Day Ahead
On the data front, further market movers will be released today by different economies; Canada, England and the U.S all taking the stage. The BOE is scheduled to post its minutes and is expected to leave its monetary decisions unchanged. Throughout the session Canada will release its GDP figure while the U.S will release personal spending and new home sales. While investors are expecting a lower GDP rate from Canada, similar to other economies’ recent data, the U.S new home sales could surprise, showing an increasing number of 439.00k
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