Gross domestic product in the 18-member currency bloc was flat in the second quarter compared with the first, which translates into 0.2% growth in annualised terms. That’s down from 0.8% in the first quarter. German GDP shrank 0.2% from the first quarter, and the French economy stagnated for a second straight quarter. European sharemarkets fell, but government bonds rose.
Yields on 10-year German bonds dropped below 1% for the first time since Bloomberg started tracking the data in 1989, with talk of potential for quantitative easing from the European Central Bank.
In brighter news in the US Class A shares in Warren Buffett’s Berkshire Hathaway traded above US$200,000 for the first time. Buffett has tied the company’s fortunes to the prospects of the US economy, and he says a high share price presents a barrier to entry for short-term investors and encourages shareholders to think like owners.
Elsewhere in the US the Federal Bank of New York said household debt fell in the second quarter for the first time in a year as mortgage originations dropped to their lowest level since 2000.
And in China gold demand shrank in the second quarter, versus the same period of last year, with purchases down 52% to 192.5 metric tonnes, leading to suggestions gold prices will drop during the second half of this year.
Here in New Zealand, ASB’s latest quarterly housing confidence survey shows a net 49% of respondents expect house prices to increase. That’s similar to the previous two quarters but down from 63% early last year. However, sentiment about buying a house has fallen with a net 11% of respondents saying now is a bad time to buy a house, the worst sentiment since October 2007.
Sales and inquiries in the London housing market fell in July at their fastest pace since the onset of the global financial crisis, according to a survey by the Royal Institution of Chartered Surveyors. The group said policy initiatives adopted by the Bank of England in recent months, plus heightened expectations of rising interest rates, has had an impact on sentiment in the market. The Royal Institution of Chartered Surveyors predicted 4.7% growth in British house prices in the next year, down from 5.9% in March, while in London the forecast has dropped from 9.3% to 4.6%.
In the currencies markets the New Zealand dollar is at US84.85 cents, A91.09c, and the Trade Weighted Index (TWI) is at 79.59.