Saturday, 10 August 2019

Markets mostly lower but Japan rises on better-than-expected growth

Markets were mostly lower on Friday.

The S&P 500 fell 0.7 percent despite an afternoon rally which saw it recovering from sharp morning declines.

The STOXX Europe 600 fell 0.8 percent, with the FTSE MIB in particular plunging 2.5 percent after the leader of the ruling League party, Matteo Salvini, pulled his support for the country's governing coalition on Thursday and called for fresh elections.

Elwin de Groot, Rabobank’s head of macro strategy, said that the latest political development “leads to uncertainty because obviously we don’t know when it will be possible for Italy to improve their budget because they’ve only just come to an agreement with Brussels, which could very easily be upended”.

In Asia, the Shanghai Composite fell 0.7 percent but the Nikkei 225 rose 0.4 percent after Japan reported a better-than-expected economic growth of 0.4 percent in the three months ending June.

Commenting on the Japanese GDP report, Kathy Matsui, vice chair and chief Japan strategist at Goldman Sachs Japan, said that “the domestic demand part of the economy was particularly robust” and suggested “that both consumption and private (capital expenditure) remain kind of the engines of Japan’s economy at least for the foreseeable future”.

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