Friday, 26 October: Ahead of today’s US GDP reading, indices on Wall Street ended Thursday higher although Asian markets failed to fully reflect the optimism from US investors as major indices in the APAC region ended lower. The tone was set for the FTSE 100 at the open as international earners continued to be impacted by the muted sentiment over global growth. Yesterday’s reversal in US indices meant they were back in the black for the year, although the gains were short lived as futures pointed to falls at the open, a forecast that came true; the NASDAQ fell 3% at the open.

Before US markets opened the US released its most recent GDP figures with strong consumer spending resulting in a 3.5% rise (vs +3.4% consensus). Weak business investment and a fall in US exports were offset by the dominant consumer spending, which account for more than two-thirds of total economic output. This individual component rose at a 4.0% annual growth rate in the third quarter of the year, the strongest rate of growth in 4 years. The strong dollar resulted in a 3.5% fall in exports, although imports rose 9.1%. The dollar aided further gains against the pound and euro, only fuelling President Trump’s argument over the direction of rate rise by Fed Chair Jeremy Powell.

The global sell off continued as the afternoon wore on, the FTSE 100 falling more than 2% intra-day. Both Amazon and Alphabet (Google’s parent company) announced disappointing earnings, accelerating the global technology sell off as investors try to get to grips with the impact of US tariffs. Despite strong economic data in the US, there is also the worry of Chinese and European slow down crossing the Atlantic. The Nasdaq now looks set for its worst month in 10 years.

To summarise, major indices ended the day as follows:

  • FTSE 100 -1.40% @ 6,906.09; -7.4% in October
  • FTSE 250 -0.96%
  • Dow Jones -1.38%; -7.5% in October
  • S&P 500 -1.80%; -9.2% in October
  • NASDAQ -2.27%


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