Global stocks subdued on US growth slowdown

The Associated Press
Associated Press

LONDON (AP) — Global stocks were subdued Wednesday after new figures showed the U.S. economy slowed more than expected in the first quarter and investors looked ahead to a meeting of the U.S. Federal Reserve.

U.S. growth slowed to a 0.1 percent annualized rate in the January-March period from 2.6 percent in the previous quarter. That was the weakest growth since late 2012 and was largely put down to the winter storms that hit North America during the period. But even so, it was disappointing as economists had been forecasting a more modest slowdown to 1.1 percent.

"Not all of the weakness can be blamed on the inclement weather," said Harm Bandholz, economist at UniCredit Research.

He noted, however, that other economic indicators suggest the economy has bounced back from the winter spell of weakness. That was evident in a hiring survey by the ADP payrolls processor, which said the U.S. economy added 220,000 jobs in April, up from 209,000 in March and the most since November. Official government figures are due Friday.

In Europe, Britain's FTSE 100 rose almost 0.2 percent to close at 6,780.03. France's CAC-40 dropped 0.2 percent to 4,487.39, while the DAX in Germany rose 0.2 percent to 9,603.23.

The euro was up 0.4 percent at $1.3869 after official figures showed the inflation rate in the currency zone rose to 0.7 percent in April. While that was just less than forecast, analysts say it is likely to be enough to convince the European Central Bank to keep its monetary policy on hold next week.

In the U.S., the Dow was up 0.1 percent at 16,550.20 and the broader S&P 500 edged up 0.1 percent to 1,879.61.

Investors looked ahead to the end of a two-day U.S. Federal Reserve policy meeting. Despite the slowdown in growth, the Fed was expected to stick to plans to reduce monthly bond purchases by $10 billion this month.

Earlier, in Asia, Tokyo's Nikkei 225 index gained 0.1 percent to close at 14,304.11 after the Bank of Japan avoided changes in its ultra-loose policy despite concern that an April 1 consumption tax hike will sap growth. The Shoko Chukin survey showed business confidence in April sank to its lowest level since February 2013.

China's benchmark Shanghai Composite Index added 0.3 percent to 2,026.36 and Hong Kong's Hang Seng tumbled 1.3 percent to 22,152.24

In energy markets, U.S. crude for June delivery declined $1.77 per barrel to $99.51 on the New York Mercantile Exchange. That came after sanctions announced by the United States and Europe on Russian officials, businesspeople and companies were less severe than traders had feared.