Friday Morning Cheat Sheet: 3 Stories Moving Markets

Major markets were mixed in Asia on Friday. Japan’s Nikkei fell 0.30 percent for the day, but still closed the week up 4.3 percent. Investors seemed keen to take profits ahead of the Golden Week holidays. The Hang Seng climbed 0.65 percent, while the S&P/ASX 200 edged down 0.10 percent.

Markets were lower in mid-day trading in Europe. Germany’s DAX was off 0.32 percent, London’s FTSE 100 was off 0.51 percent, and the STOXX 50 was off 0.87 percent. A series of disappointing earnings halted an otherwise strong week for most euro zone markets.

U.S. futures at 8:20 a.m.: DJIA: -0.18%, S&P 500: -0.23%, NASDAQ: -0.34%.

Here are three stories to keep an eye on:

1) U.S. GDP Advances in the First Quarter: Preliminary data from the Bureau of Economic Analysis show that real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.5 percent in the first quarter of 2013. This compares to a 0.4 percent increase in the fourth-quarter.

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“The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures, private inventory investment, exports, residential investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased,” the agency reported…

2) The Bank of Japan Has a Long Road Ahead: Data released on Friday show that Japan’s unadjusted consumer price index rose just 0.2 percent on the month, and is down 0.9 percent on the year. Excluding food and energy, Japan’s CPI edged up 0.4 percent on the month, and down 0.8 percent on the year. The BoJ suggests that “Japan’s economy has stopped weakening and has shown some signs of picking up,” but a real recovery will be hard fought.

This type of flat-to-negative inflation is typical of the stagflation that has plagued the Japanese economy for years, and is the target of the BoJ’s ambitious new monetary policy. Also on Friday, the BoJ released a brief statement saying that the Policy Board had decided by unanimous vote to “conduct money market operations so that the monetary base will increase at an annual pace of about 60-70 trillion yen ($610-$710 billion).”

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“Looking ahead, [the economy] is expected to return to a moderate recovery path around mid-2013, mainly against the background that domestic demand remains resilient due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up,” the BoJ added.

3) Leading Swiss Indicator Points to Modest Growth: The KOF Economic Barometer, a leading indicator of gross domestic product released by the Swiss Economic Institute, pointed at 1.02 at the end of April. This is just fractionally above March’s reading of 1.00. The slight increase indicates that year-on-year economic growth in the coming months will be positive, if modest.

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