Equity markets extended gains further today, with the rally in Europe lifting stocks for the sixth straight sessio. Concerns regarding Greece’s presidential election were relegated to the back burner as attention switched to the positive macroeconomic data. Investors still remain cautious regarding the possibility of a snap election which could threaten the ability and willingness of Greece’s government to the international bailout, however, stronger data coming out of the US saw investors on both sides of the Atlantic drive equity markets higher as risk appetite improved.
Despite durable goods orders slipping 0.7% against expectations of 3.0% growth in November investors were quickly appeased after the third US Q3 GDP reading was revised up, growing at an annualised pace of 5% q/q against expectations of 4.3% q/q. Notable improvements in consumer and business spending were behind the stronger than anticipated Q3 GDP number as the US economy grew at its fastest pace since Q3 2003. The FHFA house price index also managed to beat expectations, rising 0.6% m/m in October against expectations of a 0.3% increase. Investors reacted positively to the release with the DJIA topping 18,000 for the first time and the S&P 500 reaching a record high while the dollar index surged to a nine year high, trading above 90.150 and posting gains for a fifth straight session on the bullish GDP data.