By Carla Mozee, MarketWatch
U.K. economy grows 0.3% in the first quarter
U.K. stocks closed sharply lower on 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 1% to end at 7,030.53. European and U.S.
stocks (DJI) (SPX) were also lower, with U.S. growth worries
picking up pace ahead of the U.S. Federal Reserve's policy
announcement due Wednesday.
The FTSE 100 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 the U.K.'s gross domestic
product rose 0.3% from the fourth quarter of 2014, and by 2.4%
year-over-year. Those readings missed consensus estimates of 0.6%
and 2.7%, respectively. Read: Weak U.K. GDP hurts Tories chances
ahead of election
(http://www.marketwatch.com/story/weak-uk-gdp-hurts-tories-chances-ahead-of-election-2015-04-28)
But sterling didn't stay down for long, springing up to $1.5324
from $1.5225, where it stood ahead of the GDP data. The move came
as traders switched focus to 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.
The pound hit an intraday high of $1.5339, with the dollar
dropping further after U.S. consumer confidence fell in April, to
its lowest level since December
(http://www.marketwatch.com/story/consumers-less-confident-in-april-after-slowdown-in-hiring-2015-04-28).
Sterling hasn't traded above $1.53 since early March.
Speculation that the Fed 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 major rivals in recent
sessions. The Fed will begin meeting on Tuesday and announce its
policy decision on 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
3.2% after the Asia-focused bank said pretax first-quarter profit
fell 22% to $1.47 billion
(http://www.marketwatch.com/story/standard-chartered-considering-move-from-uk-2015-04-28),
and that bad loans were up 80% from the same period a year ago. The
bank also said it is 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. HSBC has said it is reviewing
whether to keep its headquarters in the U.K. capital.
Whitbread PLC fell 2.6% 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.
BP PLC (BP) slipped 0.2% alongside the broader market selloff.
Shares had been higher earlier after 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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