Stock markets muted despite US economy surging

LONDON: Global stock markets were mixed on Friday despite the US economy smashing expectations during the first three months of the year, with analysts warning of an economic divergence between the US and the rest of the world.

Traders have been cheered by a string of better-than-expected earnings from corporate titans this reporting season, with Facebook, Microsoft and Amazon adding to the positive mood on Wall Street, but unable to fuel broad gains.

However, there have been plenty of misses from other top US firms, including dire earnings results from Exxon Mobil and American Airlines on Friday.

Analyst Patrick O'Hare of Briefing.com said the reaction to the earnings parade had been mixed at best.

"Lots of company-specific responses, but no real market-moving thoughts in the responses other than perhaps the idea that the good news has been priced in to a large extent and that the bad news is presumably only temporary."

He added that although markets have been spinning their wheels, the US economy has shifted into a high gear.

US GDP expanded at an annual rate of 3.2 percent in the January-March period, smashing economists' expectations and surpassing the 2.2 percent growth in the final quarter of 2018, the government reported.

Wall Street opened down after the news broke, having hit new records earlier in the week.

The dip "could be a function of expected capital flight as it is quite clear that the US economy is faring quite well relative to other developed economies, namely Japan and Europe," said analyst O'Hare.

- Fire and ice -

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"While positive earning numbers have lent massive support to US equities, it's hard to ignore the inescapable fact that we are back to the divergent economic narrative where the US economy is on fire while ice water continued to pour over the rest of the globe," said Stephen Innes of SPI Asset Management.

In European deals on Friday, London stocks fell 0.2 percent in the afternoon, hit by news of falling first-quarter profits at British state-rescued lender Royal Bank of Scotland.

Frankfurt and Paris meanwhile rose 0.1 percent.

In Asia, Shanghai shed 1.2 percent, Tokyo ended down 0.2 percent and Seoul shed 0.5 percent.

But Hong Kong added 0.2 percent after suffering five straight days of decline, while Sydney, Mumbai and Singapore also edged up.

Oil prices meanwhile fell sharply on profit-taking, one day after nearing six-month highs on tight supply concerns.

Fawad Razaqzada at Forex.com said that prices had been "overbought" and a "correction of some sort was imminent".

"It remains to be seen how far oil prices will fall given the still supportive market conditions, with the OPEC+ group of producers continuing to restrict supply and the US government tightening sanctions against Iran."

- Key figures around 1350 GMT -

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London - FTSE 100: DOWN 0.2 percent at 7,414.88 points

Frankfurt - DAX 30: UP 0.1 percent at 12,299.01

Paris - CAC 40: UP 0.1 percent at 5,5561.09

EURO STOXX 50: UP 0.1 percent at 3,496.16

Tokyo - Nikkei 225: DOWN 0.2 percent at 22,258.73 (close)

Hong Kong - Hang Seng: UP 0.2 percent at 29,605.01 (close)

Shanghai - Composite: DOWN 1.2 percent at 3,086.40 (close)

New York - Dow: DOWN 0.2 percent at 26,411.00

Euro/dollar: UP at $1.1153 from $1.1132 at 2100 GMT Thursday

Pound/dollar: UP at $1.2923 from $1.2899

Dollar/yen: DOWN at 111.57 from 111.63

Oil - Brent Crude: DOWN $1.24 at $72.39 per barrel

Oil - West Texas Intermediate: DOWN 1.14 cents at $64.07