US growth figures give only temporary market boost

AP News
Posted: Oct 26, 2012 12:16 PM
US growth figures give only temporary market boost

LONDON (AP) — Strong U.S. economic growth figures shored up financial markets only temporarily on Friday, with Wall Street trading lower and European indexes posting small gains.

Stock markets started the day on the defensive following a disappointing earning statement from Apple, rose on the U.S. GDP numbers and tapered off in later trading.

Government figures showed the U.S. economy grew by annualized rate of 2.0 percent in the third quarter. That was slightly better than predictions for a 1.8 percent rise and eased some of the concerns that continue to hang over the world's largest economy.

"Strength in consumer spending remains an encouraging feature to today's report into the final quarter," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. "As they say, never write off the consumer."

The rise in stock markets proved fleeting, however. Britain's FTSE 100 closed flat at 5,806.71 while Germany's DAX rose 0.4 percent to 7,231.85. The CAC-40 in France gained 0.7 percent to 3,435.09.

In the U.S., the Dow Jones industrial average lost early gains to trade 0.4 percent lower at 13,056.48 while the broader S&P 500 index was down 0.6 percent at 1,404.96.

A 2.4 percent drop in Apple helped spoil investor sentiment after the company reported earnings that were below market expectations.

The U.S. is likely to remain the focus in the markets at least until the presidential election. Though polls suggest President Barack Obama has an advantage in the electoral college over his challenger Mitt Romney, the margins are tight.

"The outcome will have an important bearing on market developments, including the exchange rate," said Neil MacKinnon, global macro strategist at VTB Capital.

Since Romney's advance in the polls over the past the past couple of weeks, the dollar has largely remained steady. In midafternoon London trade, the euro was flat at $1.2927.

Earlier in Asia, stocks suffered from the fallout from the Apple and Amazon reports. Downbeat U.S. housing figures also weighed on sentiment.

Japan's Nikkei 225 index slid 1.4 percent to close at 8,933.06 while South Korea's Kospi tumbled 1.7 percent to 1,891.43. Hong Kong's Hang Seng shed 1.2 percent to 21,545.57.

Mainland China's Shanghai Composite Index sank 1.7 percent to 2,066.21 and the Shenzhen Composite Index shed 2 percent to 840.51.

In commodity markets, the benchmark New York contract for crude oil was down 21 cents at $85.87 a barrel.