By Carla Mozee, MarketWatch
U.K. economy grows 0.3% in the first quarter
U.K. stocks remained lower Tuesday after data showed the
country's economy grew at a slower pace than anticipated in the
first quarter, but the pound managed to bounce back from its
losses.
The FTSE 100 fell 0.8% to 7,045.85, with only the oil and gas,
and utilities sectors moving higher. The blue-chip index on Monday
(http://www.marketwatch.com/story/ftse-100-moves-lower-but-hsbc-outperforms-2015-04-27)
notched an all-time closing high of 7,103.98.
Pound: The pound (GBPUSD) hit an intraday low of $1.5174 after
the Office for National Statistics said gross domestic product rose
0.3% from the fourth quarter of 2014, and by 2.4% year-over-year,
missing consensus estimates of 0.6% and 2.7% growth rates,
respectively.
But sterling didn't stay down for long. It sprang up to $1.5278
from $1.5225, where it was ahead of the GDP data. The move came as
traders switched focus on the "clear divergence between the U.K.
and the U.S." in monetary policy "because we've had a number of
weeks of poor U.S. data," relative to U.K. reports, said Angus
Campbell, senior analyst at FxPro.
Speculation that the Federal Reserve will hold off in raising
interest rates in June
(http://www.marketwatch.com/story/fed-not-ready-to-concede-it-wont-hike-this-summer-2015-04-27)
has pushed the dollar (DXY) down against the pound and other rivals
in recent sessions. The Fed will begin meeting on Tuesday and
announce its policy decision Wednesday.
The U.K. growth figures are the last major reading on the
economy before the May 7 general election, which looks to be the
tightest race in decades. The pound's rebound after the GDP report
"indicates that cable has perhaps the potential to rally a little
bit further ahead of the election," said Campbell, but uncertainty
surrounding the outcome "will still provide resistance for
sterling."
Stocks: Among Tuesday's movers, Standard Chartered PLC dropped
2.9% after the Asia-focused bank said pretax first-quarter profit
fell 22% to $1.47 billion, and that bad loans were up 80% from the
same period a year ago. The bank also said it's keeping in
consideration a move of its headquarters out of London as the U.K.
government plans to raise a levy it charges to banks. But a formal
review of such a move hasn't been launched, the company said.
Whitbread PLC fell 1.9% after the company said Chief Executive
Andy Harrison will retire by February 2016
(http://www.marketwatch.com/story/whitbread-ceo-to-retire-2015-profit-rises-2015-04-28).
The operator of the Costa Coffee and Premier Inn hotel chains also
said profit and revenue rose in fiscal 2015.
But BP PLC (BP) shares rose 1.6% as the oil major said
underlying replacement-cost profit for the first quarter came in at
$2.58 billion
(http://www.marketwatch.com/story/bp-posts-fall-in-profit-as-lower-oil-prices-bite-2015-04-28),
above an expected $1.28 billion.
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