What higher GDP in the US and UK means for the market?

Buy in deep? Or it’s another crash to scare? 

Market analyst – IFC Markets

Today one of the most important data that was published was the GDP number. Published numbers both in the US and UK showed these economies advanced in the second quarter. 

In the US, the annual rate revised slightly higher, to 6.7% (from 6.6%) in the second quarter of 2021. At the same time, we have Real Consumer Spending also increased to 12% from 11.9% in the second estimate. At the same time, Federal Reserve recently cut its growth projections for 2021 to 5.9%. However, growing expectations for 2022 and 2023 revised higher respectively to (3.8%) and (2.5%).

Before going forward, I have to remind you about UK GDP numbers as well. Earlier today in the EU season, second-quarter GDP numbers in the UK showed a significant increase. According to the published data by Office for National Statistics, UK gross domestic product increased by 5.5% in the second quarter, compared with its preliminary estimate of growth of 4.8%. While last days of the third quarter were accompanied by bottlenecks in the economy, including a shortage of truck drivers. This increase mostly was thanks to a stronger performance from the healthcare sector that helped the society to start reopenings and economic recovery, even earlier than many other developed economies.

The latest data showed “health services and the arts performing better than initially thought”, said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

These great data from both UK and the US, considering the last speech of Mr. Powell and Bailey in the ECB forum and their Hawkish tones, telling us that we are much close to tapering and new rounds of rate hikes, even maybe in the first half of 2020. 

This market sentiment and generally going towards hawkish policies are not in the favor of stock markets in a short term, even though in the overall overview it means that the economy is improving, so mid and long term it will be positive for the market, just what doing now is create a deep price to buy more. 



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