Global equity markets edged higher yesterday as investors looked beyond weak US economic growth data for the first quarter to focus on brighter prospects for the economy, while oil prices fell on record-high US inventories.
Wall Street initially slid after the US Commerce Department said gross domestic product expanded at a 0.1 per cent annual rate in the first quarter, the slowest pace since the fourth quarter of 2012.
But stocks rebounded, as negative views were softened by the impact on the economy of an unusually cold and disruptive winter and as other data pointed to an upturn in the second quarter.
“There’s no hiding the fact the GDP number is a disap-pointment,” said Art Hogan, chief market strategist at Wunderlich Securities in New York. “The market is focusing on what economic data is telling us about Q2, and there’s a reason to believe the demand loss was more weather related than anything.”
Hogan cited other data released yesterday as evidence the second quarter will be stronger, including parts of the GDP report itself, a better-than-expected reading on business activity in the US Midwest in April, and strong numbers on private-sector hiring in April. The ADP National Employment Report showed private employers added 220,000 jobs payrolls in April, after increasing headcount by 209,000 in March.
Oil falls below $108 a barrel
The Institute for Supply Management-Chicago business barometer, which measures business activity in the Midwest, was 63.0. That was up from 55.9 in March, which was the lowest level since August, and topped the forecast of economists for a reading of 56.7.
MSCI’s all-country world index rose 0.11 per cent to 413.50. In Europe, the pan-regional FTSEurofirst 300 rebounded to close flat, up 0.03 point at 1,352.45. The Dow Jones industrial average rose 14.93 points, or 0.09 per cent, to 16,550.3. The S&P 500 gained 1.27 points, or 0.07 per cent, to 1,879.6, and the Nasdaq Composite dropped 7.217 points, or 0.18 per cent, to 4,096.326. Twitter shares fell 10.8 per cent to $38.00, after hitting a record low at $37.25, a day after the company’s quarterly results showed lackluster user and usage growth.
Oil fell below $108 a barrel with stocks in the United States at a record high on a steep increase in the Gulf Coast region and prospects for higher exports from Libya. US total commercial crude stocks rose 1.7 million barrels to just under 400 million barrels, the largest volume on records going back to August 1982.
Gulf coast oil stocks rose by 5.7 million barrels to just over 215 million, also their highest level on record. Brent crude for June delivery was down $1.03 to $107.95 a barrel. June US crude was down $1.73 at $99.55 a barrel.
The weak first-quarter read on the US economy sent the dollar careening lower against the euro and the yen, bolstering the case for the Federal Reserve to maintain its zero-interest-rate policy.