(May 31 – 09:00 ET) – There’s a slew of economic data out this morning. Canada’s real GDP came in up 1.2% in the first quarter, or 4.9% annualized, slightly stronger than most analysts expected. This number may firm up the expectation of further rate hikes by the Bank of Canada.
GDP was driven by strong export demand and a strong domestic economy. Export growth accelerated to 3.3%, with advances in exports of machinery and equipment, automotive products, and crude petroleum. Personal income was up 1.4% in the first quarter and consumer spending grew 0.8%, a slight deceleration from 1999.
For March alone, GDP rose 0.7% after receding in February. Output in financial services surged in the first quarter of 2000, lifted by record levels of stock market activity. Manufacturers experienced moderate growth. Construction activity was also strong.
Statistics Canada is also reporting that Canada’s current account balance swung into surplus in the opening quarter, by $4.8 billion, following a small deficit in the fourth quarter of 1999.
In Europe, France’s unemployment rate fell more than expected to 9.8% from 10%. However reports from France, Italy and the Netherlands seem to show that inflation remains subdued. Markets are mixed in response, with tech stocks leading the way up. London’s FTSE has slipped 24 points to 6335. France’s CAC 40 is up 27 points to 6352. The German DAX has ticked up five points to 7123.
In merger news, Lucent Technologies Inc. is acquiring optical networker Chromatis Networks for about US$4.5 billion in stock. Many analysts think the deal is too expensive. Rival Nortel Networks may get a boost as a result.
Southern Co.-PPL Corp. has bid US$3.5 billion for Welsh water utility Hyder PLC. Invensys PLC is buying Baan NV for US$802 million in cash and debt.
In Asia, markets were very strong in the wake of yesterday’s NASDAQ bounce. The Nikkei finished up 103 points to 16332. The Hang Seng had a monstrous day, finishing up 723 points, an all-time record, to 14713.