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European markets traded mixed after a release showed the German economy contracted 3.8% in Q1, much stronger than expected. U.S. futures continued to trade mixed this morning, while Asian markets closed higher.
During the Early European session, a release showed that the German economy experienced a sharp contraction in the first quarter, contracting 3.8%. This was the fourth consecutive quarter in which the German economy contracted, and at the same time, the biggest quarterly contraction recorded since records were first started, in 1970. TheLFB-Forex.com Trade Team notes that investments and exports were the main components that drove down the quarterly numbers, while spending recorded a slight improvement. Also during the European session, a release showed that the Euro-area economy contracted 2.5%
TheLFB-Forex.com Trade Team further notes that a major part of the German strength came from its export market. However, estimates are now pointing to Germany posting a huge deficit. To make matters worse, the budget deficit is forecast to exceed 90 billion euros in the following year, as the government’s income source – taxes – was affected by the credit crisis.
Asian markets were helped to advance after six U.S. insurers received approval to access the Treasury’s bailout funds today, including Prudential Financial Inc., Hartford Financial Services and Allstate Corp. “The treasury looks committed to use as much as $22 billion for the insurers, which should further stabilize the U.S. financial sector” TheLFB-Forex.com Trade Team said.
Overnight, the Japanese Nikkei gained 171.29 points (1.88%) to 9,265.02. The Australian S&P/Asx rose 49.80 points (1.34%) to 3,773.20. The U.K. Ftse rose 7.89 points (0.18%) to 4,370.47, while the German Dax fell 13.75 points (0.30%) to 4,724.72
Crude oil for June delivery was recently trading at $58.70 per barrel, higher by $0.10.
Gold for June delivery was recently trading lower by $2.50 to $923.60
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