Exchange traded funds (ETFs) appear headed for a third straight day of gains on Friday, after the government said the economy grew at a faster pace than expected at the end of last year.
- The U.S. economy grew a little faster at the end of 2010 than the government had previously estimated, boosted by more inventory building and business investment in plants and equipment. The economy, as measured by the gross domestic product (GDP), grew at an annual rate of 3.1% in the October-December quarter, the Commerce Department reported Friday. That represents an upward revision from last month’s 2.8% estimate for the same period. The quarterly expansion was the best since the start of last year and was driven by 4% growth in consumer spending, the strongest gains in four years. Consumer spending is closely watched because it accounts for 70% of economic activity. The Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (NYSEArca: TMF) is up approximately 1.5% in early trading.
- Asian stocks are mixed on Friday, with shares in Tokyo subtracting from their weekly gains. Hope for reconstruction and news of the resumption of production at some manufacturers overrode concerns about the impact of Japan’s earthquake and tsunami on corporate results. Chinese banks rallied to boost stocks in Shanghai and Hong Kong after Bank of China Ltd. reported robust results. “A strong set of leads from both Europe and Wall Street yesterday has paved the way for an upbeat finish to the week in Asian trade,” said Harley Salt, head of sales trading at IG Markets. “Traders are turning their attention to the implications surrounding the rebuilding of Japan and this will without doubt see demand for raw materials increase as a result.” The ProShares UltraShort MSCI Japan ETF (NYSEArca: EWV) gained almost 4% early Friday.
- European markets edged lower on Friday, while shares of SAP AG rallied after a broker upgrade and strong results from rival Oracle Corp. Portugal’s woes increased with a fresh downgrade from Standard & Poor’s overnight that dropped its sovereign debt rating two notches to BBB and kept it on negative watch. The agency said that the government’s loss of a key vote on its austerity package and subsequent resignation of Prime Minister Jose Socrates could “hurt market confidence and heighten Portugal’s refinancing risk.” A two-day European Union summit that concludes in Brussels on Friday is being complicated by Portugal’s problems. Speculation that Portugal may need a bailout has intensified. The iShares S&P Europe 350 Index ETF (NYSEArca: IEV) is flat on Friday.
- Oil prices fell near $105 per barrel as European financial problems raise concerns about demand. Crude prices have jumped 25% since protests against Libyan leader Moammar Gadhafi (began in mid-February) escalated into a rebellion and shut down most of the OPEC nation’s 1.6 million barrels per day of crude output. “Consequently, the market is likely to watch further events there with some nervousness,” said analysts at Commerzbank in Frankfurt. Recent signs of strong crude demand in the U.S. and China have helped push prices higher. Chinese oil demand rose 10% in February from a year earlier and U.S. gasoline inventories plunged last week, suggesting consumers haven’t cut back driving despite higher fuel costs. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEArca: XOP) is up 1.5% so far today.
Gregory A. Clay contributed to this article
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