Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

While you were sleeping: IMF warns on US growth

While you were sleeping: IMF warns on US growth

March 1 (BusinessDesk) – Wall Street advanced, with gains tempered by expectations that Congress will not act to stop automatic federal spending cuts that are widely expected to put the brakes on the pace of expansion in the world's largest economy.

The International Monetary Fund warned it will downgrade its economic forecast for the US if US$85 billion of schedule federal spending cuts take effect on March 1.

If all cuts go ahead, the IMF would lower its current estimate for a 2 percent expansion for US gross domestic product this year by at least 0.5 percent, IMF spokesman William Murray told reporters at a news briefing. Global growth also would be hit.

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.14 percent, the Standard & Poor's 500 Index gained 0.18 percent, while the Nasdaq Composite Index climbed 0.37 percent.

Expectations of a slowdown in the pace of growth buoyed US Treasuries.

Commerce Department data released today showed GDP expanded at an annual rate of 0.1 percent in the final three months of 2012, compared with a previously estimated 0.1 percent contraction. That was below the 0.5 percent growth forecast by economists polled by Reuters.

"It’s pretty well baked into the cake that no action is likely to be taken on the sequestration tomorrow,” Thomas Simons, a government debt economist in New York at Jefferies Group, one of 21 primary dealers that trade with the Fed, told Bloomberg. “GDP was weaker than expected. It’s nice to see the negative sign go away, but it’s still pretty weak.”

The negative sentiment was offset by the latest news on the labour market. Applications for jobless benefits surprisingly dropped 22,000 last week to 344,000. Economists polled by Reuters had expected first-time applications to fall to 360,000.

Shares of JC Penney sank, last down 14 percent, after the company reported a net loss of US$552 million in the quarter ended February 2, compared with US$87 million a year earlier.

In Europe, the Stoxx 600 Index finished the day with a 1 percent gain from the previous close. The index has advanced for the ninth straight month and is up 3.7 percent so far this year, according to Bloomberg.

Good news on Europe's largest economy helped as German unemployment posted a surprise drop February.

Benchmark stock indexes rose in Frankfurt and Paris, both advancing 0.6 percent, while the UK’s FTSE 100 added 0.6 percent.

The political impasse in Italy remains a concern for all of Europe. In Berlin, Italian President Giorgio Napolitano said the formation of a new government would take time and that it's important to keep in mind that the Monti government remains in office for now.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

NZ's Space Programme: Rocket Lab Makes It To Space (But Not Orbit)

Electron lifted-off at 16:20 NZST from Rocket Lab Launch Complex 1 on the Mahia Peninsula in New Zealand. It was the first orbital-class rocket launched from from a private launch site in the world. More>>

ALSO:

Earlier:

Budget: Irrigate (Good Times, Come On!)

Additional grant funding of $26.7 million over the next three years plus a capital boost of $63 million towards irrigation investments in Budget 2017 will deliver economic and environmental benefits through better use of water... More>>

ALSO:

Silver Fern Farms: Proposal To Close Fairton Sheepmeat Plant

Silver Fern Farms has advised its people of the proposal to permanently close the site, and has discussed potential transfer options to its other sites in the region as part of the consultation process...
More>>

ALSO:

MPI: Myrtle Rust Appears In Taranaki

The nursery in Waitara (just north of New Plymouth) reported suspected myrtle rust symptoms on young plants to the Ministry’s 0800 number yesterday (Tuesday). More>>

ALSO: