MercoPress, en Español

Montevideo, May 20th 2022 - 10:18 UTC

 

 

US economy 2Q performance changes the mood of markets

Friday, August 28th 2015 - 07:06 UTC
Full article 4 comments
US economy growth overall was due to strong consumer and government spending, and higher exports, besides greater corporate investment. US economy growth overall was due to strong consumer and government spending, and higher exports, besides greater corporate investment.
The news gave a sharp boost to the price of oil, which rose 10%. The price had been at its lowest. Brent is at $47.50 and US light crude at $42.77 a barrel. The news gave a sharp boost to the price of oil, which rose 10%. The price had been at its lowest. Brent is at $47.50 and US light crude at $42.77 a barrel.
London, Paris and Frankfurt exchanges all closed up more than 3%. Wall Street also jumped with the Dow Jones index up 366.72 points, or 2.3%, at 16,285.51. London, Paris and Frankfurt exchanges all closed up more than 3%. Wall Street also jumped with the Dow Jones index up 366.72 points, or 2.3%, at 16,285.51.

Shares rise and oil prices jumped 9% after revised figures showed the US economy grew by far more than had been thought between April and June. The economy grew by an annualized rate of 3.7%, up from the first estimate of 2.3%. Growth of 0.6% in the first three months of the year was not revised.

 The update reflected greater corporate investment than previously estimated. The growth in the economy overall was due to strong consumer and government spending, and higher exports.

Inventories were also higher than the Commerce Department had initially estimated.

The revision was welcome news to investors that have experienced a tough week on global stock markets, triggered by fears that the Chinese economy is slowing. They had expected the GDP number to be revised up, but not by as much as it was.

The news gave a sharp boost to the price of oil, which rose 10%, albeit from a very low base.

The price had been at its lowest for more than six years, but despite the gain it remains well under $50 a barrel. Brent is at $47.50 and US light crude at $42.77 a barrel.

Share values, too, responded immediately to the revised US data, adding to strong gains made in morning trading. The main London, Paris and Frankfurt exchanges all closed up more than 3%. Wall Street also jumped. The Dow Jones index closed up 366.72 points, or 2.3%, at 16,285.51.

The revised figures are watched closely by investors looking for clues as to when US interest rates may rise.

Earlier this week, a Federal Reserve official said that, given the stock market turmoil and fears for the Chinese economy, the case for an early rate rise was “less compelling”.

Prior to William Dudley's intervention, many economists had expected the Fed to raise rates in September.

The strong growth shown in the revised GDP figures will encourage some investors that an early rate rise may be back on the table, although next month remains unlikely, analysts said.

“Despite the good GDP numbers that we saw today, September largely seems off the table because of the turmoil that we've seen in the past week,” said Scott Brown, chief economist at Raymond James.

Recent data, however, “certainly points to a possibility of a rate hike this year,” he added. US interest rates have been held at near-zero since the 2008 financial crisis. When they finally do rise, it will be the first interest rate increase in nine years.

Top Comments

Disclaimer & comment rules
  • Voice

    Yay the US is looking good again...amm gonna git me another piece of the good ole US of A....
    Looking at a property in the Poconos...
    No doubt Yankeeboy will tell me it's another sh!t area...Mountains and creeks (cricks)..what's not to like....
    Cash is king....;-)))))
    ps...I reckon there's enough room to also site a trailer....;-)

    Aug 28th, 2015 - 02:18 pm 0
  • Captain Poppy

    You seem to have money to spare so do the Berkshires.....home of Tanglewood and Norman Rockwell. Poconos is so.......Atlantic City. The North End in Boston is awesome year round.......you're rich, you can do the Waterfront.

    You must really have a thing for Pennsylvania, but someone have to revitalize the state, might as well be someone of your kind. (hehehe)

    Aug 28th, 2015 - 03:35 pm 0
  • Voice

    Rich my arse Pops...
    It was a foreclosure I was looking at...;-)
    I was also waiting for YB to bite...
    I'm sort of half interested...but I tend to look in places I'm familiar with...and like you, I like a bargain...not cheap, just value for money...;-)

    Aug 28th, 2015 - 05:57 pm 0
Read all comments

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!