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US GDP upset sends the dollar and equities lower

US GDP has the bulls running for cover, with the FTSE down by 60 points as the session comes to a close.

Federal Reserve

UK markets
A weak US GDP figure has fed through into Europe, with the DAX and the FTSE 100 smashing through key support levels. Prior to this, European markets were dealt a suckerpunch by Greek finance minister Yanis Varoufakis who expects to remain in charge of creditor negotiations, confounding yesterday's rumours to the contrary.

With reports that Mr Varoufakis was attacked by a group of anarchists in Athens last night, it seems he has had his own back by stifling hopes of a deal after announcing his continued involvement. However, Mario Draghi has thrown the Greeks a welcome, albeit small, bone by raising the amount of emergency liquidity available to Greek banks by 1.4 billion euros.

Unfortunately, unlike the funds of local governments, Syriza will find it hard to appropriate these funds in the same way. Ultimately the ongoing uncertainty of Greek involvement in the Eurogroup project, coupled with a shockingly poor US GDP report, has led to the deterioration we are seeing in European and US indices.

The increased likeliness of a Labour coalition continues to weigh on homebuilders today, with Ed Miliband promising to implement measures to limit rent increases, thus stifling the financials behind buy-to-let investments. The feeling is that a Labour government would be less likely to 'get into bed' with big business, which may be good for voters but not so good for the FTSE.

The release of Bob Diamond may have been seen as the opportunity to clean up the reputation of Barclays, but unfortunately scandals and fixes appear to be somewhat of a recurring theme which continues to blight the bank. Barclays will now have set aside £2 million to address its foreign exchange rigging scandal,  overshadowing what Anthony Jenkins has called its'best quarterly performance in years'.

US markets
The US posted a shocker of a GDP report today, giving the impression of an economy which has lost a large proportion of oil output and exports. Yes, weather will have played a part, bringing Q2 expectations higher, but with Q1 GDP at 0.2% the country is still some way from seeing anything like the kind of growth that was expected from the Fed when it started moving towards a rate hike. Expectations of a June hike are all but out the window and, should the current 'data dependant' policy see many more poor jobs or GDP reports, we could be lucky to even see one by September. Janet Yellen will dominate the airwaves yet again today, but with no change expected it will all be about the tone  which is sure to be impacted by deteriorating data points.

Twitter was shot by its own gun as a leaked earnings report became public knowledge via a tweet, sending the shareprice tumbling. The issue Twitter ultimately faces is its ability to monetise users; using Facebook as a blueprint, it needs to do this sooner rather than later. Mastercard is trading 2.62% higher following news that it beat profit estimates in Q1. Despite an admittedly 'challenging currency environment', the company's ability to grow 19% in cross-border volumes says a lot of about its business model going forward.

Commodities
Oil prices are attempting to capture further gains to accompany an already strong April, following a worse-than-expected US inventories number today. Whilst growth in stockpiles was significantly less than expected the fact is that US stockpiles are higher than ever, and at some point they will have to unload them onto the markets. For now they appear to be holding back for a better price, yet the warning signs of another fall are there.

FX
Today has seen EUR/USD break to an almost two-month high, coming off the back of an unexpectedly poor US GDP release. Dollar weakness has been a trend of late and the moves we are seeing today in the currency markets point to the possibility of it not being over quite yet.

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