Surprise Q1 drop in growth for US and UK takes stand against EU demands

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US GDP figures lower than expected but no panic on Wall Street…. but caution ahead of those figures did see Asian stocks generally fall… the UK tells Europe to ‘work with the money you’ve got’ after requests for more funds…. and hopes that the end of the mining boom might be softened by latest ABS research….

US Unexpected Q1 Downturn
The US Commerce Department announced on Thursday that the country’s economy had fared worse than originally expected during the first three months of this year. Figures were expected to show a slight increase in GDP for Q1 but there was a 1% decline, blamed largely on bad winter weather. These figures are the first decline in US growth since 2011 but the markets were largely un-phased by the drop as there are already good signs for Q2, including a drop in those out of work. Read the full story.
Asia Markets Mostly Down
Most Asian markets were down on Thursday, with Japan once again standing out from the pack with its sixth consecutive increase at close. The markets were cautious as US GDP data was awaited; better than expected figures may have seen a bounce in the market but as the figure was lower than expected, this was reflected. Read the full story.
Europe Asks for More – UK Says No
Their timing couldn’t have been worse, with growing concern about the EU, as the recent euro-elections showed, the European Commission asking for more cash was never going to go well. The Commission says it needs another 4.7 billion euros this year for aid to members and Ukraine with a little under half of that coming from EU member states. However, the UK Treasury was being asked for the equivalent of $835 million USD and they refused saying that the EU had to work with the money it already has. Read the full story.
Mining Investment Down, Services Up
Although the end of the mining boom means that the resources sector saw a drop of investment of nearly 9% in the March quarter, a new Australian Bureau of Statistics survey shows a welcome uptick in both planned and actual investment levels in service industries. The sector, which includes a wide range of businesses including finance, professional services, property and finance, is looking to invest over $53bn over the coming year.
CBA has predicted the lift in non-resource investment and an increase in housing construction will goad the RBA into lifting interest rates by the end of the year.
Rupee Drops Again Against the Dollar
It’s very early days for the new administration of India and markets and currency are unsettled. Following a drop in shares, a demand for the dollar saw the Rupee fall for the fourth time in five days. A fall in local equities also hit the currency. India’s Sensex was down 1.31%. Read the full story.
Philippines Reveals Slower Growth
It wasn’t just the US GDP figures that showed slower growth than expected on Thursday. The Philippines Q1 figures revealed the disaster that hit the country last year had meant slower progress for the economy, at 5.7% rather than the median 6.4% expected. The Philippines market reacted with investors offloading local stocks and the main index ending on a one month low. Read the full story.