World markets overnight: US growth slump sends stocks, dollar tumbling

Figures confirming a sharp slowdown in the US economy at the start of the year sent stocks and the dollar tumbling.

GDP grew a lower than expected 0.2% in the three months to March 31 as businesses slashed investment, exports tumbled and consumers showed signs of caution.

This was well below the 1% expansion forecast by economists, and marks a significant downshift from the 2.2% pace of growth in the fourth quarter.

Stocks on Wall Street held on to their losses after a statement from the Federal Reserve signalled that interest-rate increases were still possible in the coming months, though the timing remained uncertain.

The Fed statement, on the heels of a two-day policy meeting, attributed the economy’s first-quarter slowdown to “transitory factors,” an indication that the central bank hasn’t ruled out higher interest rates in the months ahead.

The Dow Jones Industrial Average fell 74.6 points, or 0.4%, to 18035.53, while the S&P 500 was 7.91 points lower, or 0.4%, to 2109.

The Nasdaq Composite Index fell 31.78 points, or 0.6%, to 5023.64.

International markets
European stocks plummeted, pressured by a sharp rally in the euro against the dollar on lower US growth.

The Stoxx Europe 600 declined 2.2%, adding to the previous session’s drop of 1.5% on weak corporate earnings.

Germany’s DAX lost 3.2%, while France’s CAC 40 lost 2.6% and London’s FTSE 100 fell 1.2%.

In Asian markets, stocks fell in China and Australia.

The S&P ASX 200 ended 1.85% lower, led by the four banks as uncertainty rises over a central bank rate cut next week. ANZ lost 1.9%, Commonwealth Bank 2.2%, National Australia Bank 2.4% and Westpac 2.6%.

Hong Kong’s Hang Seng Index fell 0.2% to 28,400.34 while the Shanghai Composite Index was flat at 4476.62.

Commodities and currencies
Oil prices hit fresh 2015 highs after data showed a deceleration in the growth of US crude stockpiles.

Light, sweet crude for June delivery rose $US1.52, or 2.7%, to $US58.58 a barrel in New York, the highest settlement since December 11.

Brent crude, the global benchmark, rose $US1.20, or 1.9%, to $US65.84 a barrel, the highest since December 9.

Gold for June delivery, the most actively traded contract, closed down 0.3% at $US1210 an ounce in New York.

In currency trading, the euro rose 1.8% to $US1.1164 – a level last seen in early March – while the UK pound  was up more than 1% against the dollar.

The Aussie dollar bumped up above 80USc for the first time since January but recently traded at 79.96USc.