Markets Cautious Ahead of GDP Figures


LONDON -- The S&P 500 (INDEX: ^GSPC) and the Dow Jones Industrial Average (INDEX: ^DJI) are set to open slightly higher this morning as markets remain optimistic ahead of today's U.S. second-quarter GDP figures, which are due at 8:30 a.m. EDT. Growth in the second quarter is expected to be 1.3% -- slightly lower than the 1.9% recorded in Q1. However, a disappointing result is likely to cause a sharp fall in the markets.

Last night's corporate earnings news could also result in active trading when markets open; Amazon, Facebook and Starbucks all announced disappointing earnings last night and fell heavily in after-hours trading, and all three could see heavy trading when markets open. Notable corporate results due before the bell today include Chevron, Merck, and Newell Rubbermaid.

In Europe, the rally triggered by ECB President Mario Draghi's comments continued this morning but started to fade away as the reality that no new policy measures have been agreed upon hit home. Despite this, bond yields remain lower than they have been recently, with the yield on Spanish 10-year bonds still below 7%. The Draghi effect also enabled Italy to sell 8.5 billion euros of six-month bonds this morning at a yield of just 2.45% -- the lowest since May and substantially less than last month's 2.96%.

The main European markets were mixed at the end of the morning, with Germany's DAX down by 0.2% but France's CAC up by 1.25%. The Italian FTSE MIB was up by 1.8%, and Spain's IBEX was just ahead, up by 0.1%.

In London, the FTSE 100 (INDEX: ^FTSE) was down by just 0.1% at 7 a.m. EDT. The morning session saw heavy buying of Barclays bank following its latest half-year results, which showed a 13% rise in adjusted pretax profits to 4.2 billion pounds and included an apology from Chairman Marcus Agius for its involvement in the LIBOR scandal. Barclays' shares were up by nearly 5% at the end of the morning, while at the other end of the leaderboard, Anglo American was down by 4% after its first-half profits turned out to have fallen by more than 50%, thanks to weaker commodity prices and market conditions.

However, neither Anglo American nor Barclays is the FTSE 100 company that recently persuaded billionaire Warren Buffett to invest more than $1 billion. The legendary investor recently bought another famous British name with global expansion potential -- and you can discover the identity of the company and the price he paid in this special exclusive report. Best of all, the report is free -- so download it today while it's still available.

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