UPDATE (13:56): Markets have erased earlier losses after a report showed the US economy grew by an annualised 2% in the third quarter of the year, better than expected by economists and an improvement on 1.3% growth in the previous three months.
Economists were, however, quick to put the numbers in perspective, with Rob Carnell of ING noting that the quarterly figure was flattered by 'a somewhat freakish surge in government spending' after a 13% rise in national defence spending.
Nonetheless, European markets rose from some fairly deep morning troughs, with Britain's FTSE 100 back above 5,800 and the French and Germany benchmark indices both flat.
Gains are being capped by this week's string of weak US corporate earnings reports, with Apple and Amazon both disappointing yesterday.
Next week brings a barrage of data to help investors better gauge the US economy, culminating on Friday with the last non-farm payrolls employment report before the presidential elections on 6 November.
Anglo American among few FTSE risers as chief exits
09.01: Anglo American (AAL.L) was one of just a dozen gainers on a falling FTSE 100 today after the group announced that chief executive Cynthia Carroll was stepping down after nearly six years in the role.
The mining group said that Carroll (pictured below), who has recently come under pressure from investors to leave, will remain in her post until a successor has been appointed and ‘an appropriate transition has taken place’.
Analysts at Nomura described Carroll’s tenure at one of the world’s biggest mining companies as ‘mixed’. Some shareholders disagreed with Carroll’s decision to reject a merger offer from Xstrata (XTA.L) in 2009, while recent labour unrest in South Africa has exacerbated a sharp fall in the group’s share price this year.
‘Recently, concerns around management and the future of Carroll has been the major feedback from investors on Anglo,’ the Nomura analysts said, adding that the lack of an immediate replacement makes the outlook for the group uncertain. Today the shares rose by 2.1% to 1,857p.
Pearson publishing merger
Pearson (PSON.L) was also among the winning shares in Friday morning trade, up 1.6% to 1,212p, after confirming on Thursday evening that it is in talks to merge its Penguin publishing business with Random House.
If successful, this would mark the first deal since the company announced that John Fallon was replacing Marjorie Scardino as chief executive, but analyst Alex DeGroote of Panmure noted that it would not be 'overly material to investment case'.
Overall the market was trading in the red, however, after more disappointing US corporate earnings figures last night – this time from Apple and Amazon – and following sharp losses on Asian markets. The FTSE 100 was off by nearly 0.6% to 5,772, with similar losses across other European markets.
In Japan the government announced a new stimulus programme, which at 423 billion yen was twice the size expected by markets.
The yen was the only major currency making big moves, down 0.46%, with investors expecting the central bank to announce more monetary easing measures next week.
There was also a surprise rise in German consumer confidence according to a report published today, but traders noted that investors remained fixated on the US where a reading of third quarter GDP will be published today. Growth of 1.9%, which is the figure expected by economists, would be an improvement on the previous quarter’s 1.3% growth.
The oil price continued its weekly decline, with Brent crude futures dropping by 0.5% to $107.