Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US GDP growth slowed in the first quarter to an annual rate of 1.8% from 3.1% in the fourth quarter of last year.
Higher petrol and food prices depressed consumption and bad weather reduced new construction in the world's largest economy. See more at WSJ on the weaker growth.
Despite that news of slowing growth and of higher US jobless claims, the Dow and the S&P 500 stock indices rose around 0.5%.
Confirmation from US Federal Reserve Chairman Ben Bernanke that he will keep interest rates at almost zero for some time to come encouraged investors to buy stocks and other riskier assets to get higher returns than zero in the bank. Also, news of takeovers funded by cheap borrowing boosted stocks. See more at Bloomberg on rising stocks.
However, fears of continued low interest rates and money printing increased demand for 'inflation-proof' assets such as gold and silver, which both hit record highs overnight. Silver neared a record US$50/oz, while gold hit US$1,538/oz. See more on record gold and silver prices at Reuters.
The New Zealand and Australian dollars benefited from this fresh talk about low interest rates in the United States, fueling more demand for assets in countries with higher interest rates and exposure to commodity prices.
The New Zealand rebounded this morning to over 80 USc, having fallen yesterday in the wake of the Reserve Bank's dovish comments when it left the Official Cash Rate on hold. See our earlier article on the RBNZ's decision. The Australian dollar rose over US$1.09.
Meanwhile, Australasia's biggest consumer food products group, Goodman Fielder, issued a surprise profit warning yesterday. Goodman Fielder owns the Vogels, Meadowfresh and Edmonds range of food products, among many others.
It said higher commodity prices and an inability to push prices higher when dealing with intransigent supermarket groups Woolworths and Coles Myer would push its annual profit lower. See more at The Australian on Goodman's profit warning.
Finally, the Royal Wedding may actually reduce British GDP because the national holiday declared for the day is expected to reduce productivity. See more here at the LA Times.