29th July 2011
Investors were already worried about the US debt crisis and a possible Spanish downgrade, but weaker than expected US growth figures have sent markets tumbling even further, adds the Guardian.
Data showing that the US economy grew at a dead-pace 0.4pc in the first quarter – compared with an original estimate of 1.9pc – and only 1.3pc in the second quarter of 2011 – against forecasts of 1.8pc – is expected to add to market worries.
The FTSE 100, down around 55 points ahead of the release of figures, is down 89.02 points at 5784.19 (Thursday). The fall would have been worse if not for a near 4% rise in Vodafone, which has added more than 11 points to the index, adds the Guardian.
FT Alphaville says: "Perhaps this will jolt lawmakers into getting their pony on. S&P and Nasdaq futures fell on the news, while – of course – yields fell on 10-year US Treasuries. Brent crude futures were down. The US dollar was at a four-month low against the Japanese yen."
With only four full days left, the Treasury could unveil as early as Friday an emergency plan explaining how the government would function and pay its obligations if Congress does not agree to raise its borrowing limit from $14.3 trillion (£8.8 trillion).
House of Representatives Speaker John Boehner's failure to round up enough support for his plan on Thursday exposed a rift in the Republican Party that is hampering efforts to reach a compromise to raise the US debt ceiling before next Tuesday.
To receive our free email newsletter sign up here.