28 Jan 2012: Short-term US growth up

FTSE 100 5733 Down 107bp
S&P 500 1316 Down 16bp
NIFTY 50 India 5204 Up 90bp

Major Stories

  • US growth accelerates
    • US economic growth accelerated to a robust 2.8% in Q4 of 2011; this can be attributed to the inventory build up, but this will be unsustainable in the long run
    • US economy looks set to continue to expand steadily, although there are still factors preventing an acceleration in the times to come; consumption rose at a mediocre 2%
    • Final sales to domestic purchasers rose at only 0.9% compared with 2.7% in Q3
    • The residential building market has shown good growth at over 10%, although this might be due to seasonal factors as warmer weather is more conducive to this
    • One economist predicts a job growth of 140,000 per month for 2012 owing to a stable and positive expectation in the US
  •  Facebook to file IPO details
    • Facebook will get things rolling this week regarding its public listing on the Wall Street; this is expected to be the largest IPO by a technology company ever
    • A share sale is expected to be launched in May and will seek to raise about $10bn; Google’s 2004 IPO raised $1.9bn
    • Facebook’s shares are currently being privately traded at levels which value the company at about $80bn; by the time they go public the value of the company could be anywhere between $75bn-$100bn, the uncertainty arising from recent stock market volatility
  •  Fitch cuts ratings in Eurozone
    • Fitch has cut ratings for 5 Eurozone countries and has indicated the possibility of further downgrades
    • These countries include Italy, Spain, Belgium, Slovenia, and Cyprus
    • Italy was cut two levels to A- from A+; Spain to A from AA-

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