Asian shares edge higher this morning in signs of stable growth in the United States. The MSCI index of Asia-Pacific shares outside Japan added 0,2 percent after posting its biggest drop in two months last week. Australia and the South Korean Kospi are also up. The Hong Kong and Shanghai indexes ended marginally down. The US markets are closed today due to the storm forecast. New York is expected to be hard hit by Hurricane Sandy and Mayor Bloomberg has ordered evacuation of parts of lower Manhattan.
The US Gross Domestic Product, GDP, rose a mediocre 0,2 in the third quarter to expected 2,0 % for 2012. Housing gave the economy a boost, but business investment is lagging. The growth data point to an economy with little momentum, and leave considerable doubt about its resilience to the so called “fiscal cliff” of tax rises and spending cuts due to take place at the end of the year. With little sign that the growth is poised to accelerate, the US Federal Reserve will have every reason to continue its third round of quantitative easing known as Q3.
Non-residential investment continues to decelerate. There seems to be two reasons for the reversal in capital spending: a weakening in global growth and worries about the fiscal cliff. It is hard to judge which effect is greater. The slowdown in China and other emerging markets which have soaked up US export in recent years probably accounts for a good part of the fall in investment. Investors are also reacting strongly to doubt s about the fiscal environments. Slow steady growth in consumption seems to be the main force supporting growth in the third quarter.
The USD is stronger against the Euro in early trading in Asia at 1.2932. It has though recovered from Friday’s two-week low at 1.2882. The Yen is gaining. USD/JPY trades at 79,72. Big and violent street demonstrations against austerity in Italia, Spain and Greece underline the social and economic explosives caused by the debt crisis in the Euro zone. The dollar index DXY measured against a basket of six major currencies hit a near seven-week high on Friday and is at the same level today. The grim weather forecasts and Hurricane Sandy has stabilized oil prices. Brent crude is trading above 109. Gold and silver are trading slightly higher; 1715 and 32.15.
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