Investors remain wary ahead of this afternoon's US preliminary quarterly GDP data due out at 13.30. This data is released quarterly about 60 days after the quarter ends. Economic growth in the US slowed down in the first three months of the year.
The advanced quarterly gross domestic product (GDP) came in well-below expectations at 0.2% on April 29 after the forecast called for 1% growth. Evidence of underperformance in the US economy began to manifest in the last quarter of 2014. Among the factors cited that are hindering growth are the harsh winter, lower energy prices, a strong USD and port disruptions on the West Coast.
Commenting on the upcoming data, Connor Campbell, a financial analyst at Spreadex notes that 'a mixed morning for the greenback is allowing the Dow to toy with the idea of posting some gains, and the prospect of a declining GDP estimate could provide dollar-drop the US markets need to regain the ground they have lost this week.
However, as shown in the past, there is a threshold on how much bad news the markets are willing to take, and a truly disastrous GDP figure will likely not help the Dow Jones, even if the dollar begins to decline.'
Head analyst at at London Capital Group Brenda Kelly is also less than sanguine about the upcoming data: 'Given that Q1 GDP is likely to be revised down to -1%, the expectation that Q2 will not be a whole lot better could well set the markets back even further.'
Data does indeed disappoint, if not as much as expected. Gross domestic product in the world's largest economy fell by 0.7% in the first quarter according to data released by the US Bureau of Economic Analysis. This was better than the 0.9% drop forecast and while it remains a disappointing performance, there may be some comfort to be taken from the fact that lower first quarter figures may reflect seasonal adjustments employed by US statistics collators.