FTSE pushes higher despite disappointing growth data

<p>European markets pushed higher during the last session of the week despite weaker than expected UK growth data. UK GDP figures for the final quarter […]</p>

European markets pushed higher during the last session of the week despite weaker than expected UK growth data.

UK GDP figures for the final quarter of 2012 had been forecast to show a contraction of 0.1%, however, the actual data came in showing a disappointing contraction of 0.3%. Some analysts believe that you shouldn’t pay too much attention to quarterly readings; however, the long term trend is also rather appalling, showing the slowest recovery for the UK economy out of a recession and also the possibility of a triple dip recession. Should Q1 figures for 2013 also show a contraction, which is highly likely given the widespread snow and travel disruption then the UK will officially be in Triple dip territory.

Despite the disappointing news, the UK market remained positive heading into the close the FTSE was up 0.3%, the CAC gained 0.4% whilst the German DAX added an impressive 1.1% taking it to its highest level since 2008 after business climate data was released.

Even though the UK was struggling to digest disappointing growth data, Germany on the other hand was celebrating better than expected business climate survey results. Germany’s IFO Survey was forecast at 103 stronger than the 102.4 from the previous month. However, the actual figure came in at 104.2 indicating that the German economy is turning a corner and therefore the exporter could be looking towards a stronger 2013 as global growth concerns ease.

Speaking from the World Economic Forum at Davos, Draghi, President of the ECB, confirmed that financial markets are experiencing a relative tranquillity at the start of the year and all indices point to a substantial improvement. He added that he believed that “the level of economic activity is in the process of stabilizing at low levels and we forsee a recovery in the second part of the year”. However, with global stock markets trading at multi-year highs the current rally could be set for a pause to catch its breath.

Focusing on the FTSE 100 miners put pressure on the index tracking metal process lower and following Anglo American’s release of fourth quarter earnings which showed a rise in coal, copper and diamond output but a fall in nickel and iron-ore production. Anglo American finished the day down 0.7 % and sector peers Eurasian Natural Resources and Rio Tinto and lost 3.3% and 1.5% respectively.

On  the positive side banks moved higher as did Royal Dutch Shell following a ratings uplift from Societe Generale.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.