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Global Market Wrap-Up - June 26, 2013

Wednesday, June 26, 2013
Mark Hanna
U.S. stocks continued their bounce from oversold levels as a poor 1st quarter GDP figured emboldened traders who rely on the Federal Reserve to reconsider their idea that quantitative easing will be reduced anytime soon. So this is another example of bad news for economy = good news for stock market. Precious metals were hit extremely hard even as equities rallied. The S&P 500 added 1.0% and the NASDAQ 0.85%. Despite the "risk on" session, treasury yields did not fall much with the 10 year down to only 2.54%.
  • Gross domestic product expanded at a 1.8% annual rate, the Commerce Department said in its final estimate. Output was previously reported to have risen at a 2.4% pace. Economists polled by Reuters had expected first-quarter GDP growth would be left unrevised at 2.4%. Details of the report showed downward revisions to almost all growth categories, with the exception of home construction and government.
  • Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.6% pace rather than 3.4%. Exports, previously reported to have grown, actually contracted at a 1.1% pace in the first quarter, cutting 0.15% point from GDP growth.
Crude oil gained 0.2% to $95.50, while gold sunk 3.6% to $1229.80, and silver 4.8% to $18.59.

British stocks added 1.0%, German stocks 1.7%, and French stocks 2.1%. European stocks reacted to dovish comments from Mario Draghi:
  • Mr. Draghi addressed concerns about more restrictive central-bank policies by saying the ECB's policy will stay accommodative for the foreseeable future.
Japan fell 1.0% and China 0.4%.
  • The People's Bank of China released a statement Tuesday where the central bank said that it had introduced funds to some financial institutions in recent days, a sign that the central bank is acting to halt the liquidity crunch that has overshadowed the country's financial system over the last few weeks. The statement came after a central bank official said earlier Tuesday that the PBOC would "guide market interest rates into a reasonable range," allaying concerns over interbank lending rates, which have spiked in recent sessions.