LONDON: Stock markets rose Friday as data showed the US economy expanded at the fastest annual growth rate in almost four years.
The world’s biggest economy grew at an annual rate of 4.1 percent in the second quarter, the fastest rate among industrialised nations, the US Commerce Department said.
The figure was in line with the forecasts of analysts, who had expected that US President Donald Trump’s massive $1.5-trillion of tax cuts that kicked in at the start of the year would fire up economic activity.
As the figure came in as expected, Wall Street opened with only small gains. The Dow nudged up just 0.04 percent in the first minute of trading, with disappointing earnings dampening sentiment.
The gains were higher in Europe, where London won 0.5 percent, with telecoms group BT heading the FTSE 100 risers’ board after posting better-than-expected first-quarter earnings.
In early afternoon eurozone deals, Paris added 0.2 percent while Frankfurt rose 0.4 percent in value, aided partly by this week’s easing in EU-US trade tensions.
– ‘Come off the boil’ –
While the strong growth rate was welcome, analysts said investors have plenty to worry about going forward.
“The US economy is likely to come off the boil in the coming quarters, as the boost to growth delivered by the tax cuts begins to wear off, trade restrictions and an overall slowing of the global economy start to weigh on exports, and further interest rate hikes tighten financial conditions,” said economist Pablo Shah at the Centre for Economics and Business Research.
He said the growth rate was none the less impressive and that the strong labour market together with still accommodative fiscal and monetary policies mean that US was likely to remain at the top of the growth pack among advanced nations.
– Twitter’s wings clipped –
Wall Street’s internet frenzy continued on Friday.
Twitter shares plunged 14 percent in opening trade after the social network warned it could potentially lose millions of users as it cleans up the platform.
The slump came despite a record profit for Twitter in a quarterly report which also said the number of users could fall as part of the effort to weed out abusive and fake accounts.
Wall Street was dragged down on Thursday after Facebook warned of weaker growth, sending its shares falling nearly 20 percent and wiping out some $100 billion in market value.
Investors have been concerned about the financial impact of greater EU privacy protections, which many major internet firms are applying to all their users, as well as greater public concern about misuse of their data.
Asian stocks mostly edged higher Friday with Tokyo buoyed once more by a weaker yen, which helps exporters.
Source: Brecorder
