By Anne D. Picker, International Economist,Econoday
Monday, July 30, 2001

Investors had no distractions from the constant stream of dismal corporate reports. There even wasn't any news from central banks (other than Alan Greenspan's repeated testimony to a Senate Committee). The U.S. had a slew of indicators at the end of the week that could have provided clues to future growth but proved only to substantiate what we already knew - the economy barely grew in the second quarter. Job cut announcements spread to Europe, and combined with depressing earnings reports, pummeled equities. Although stock markets revived at week's end, tremors earlier in the week had already pushed key indexes to lows not seen for several years. Thin volumes normally associated with vacation time added to the volatility.

Britain and the United States released their first estimates of second quarter gross domestic product. Both showed weakening growth. The British growth slipped to only 0.3 percent on the quarter and 1.2 percent when compared with the second quarter last year. The United States was weaker still, growing 0.2 percent on the quarter and 0.7 percent when compared with last year. (Convention in the United States is to look at the annualized quarterly rate of growth, which was 0.7 percent rather than the simple quarterly increase used almost everywhere else.) Britain had avoided importing sagging growth until now, although manufacturing has been in recession due largely to the relative strength of sterling. Its primary export market is Continental Europe and the weak euro has made British goods expensive there. However, the United States remains Britain's largest trading partner, ahead of Germany and France. Second quarter GDP also began to show the negative impact of foot and mouth and mad cow diseases. Not only did these epidemics decimate agriculture, but they also had a negative impact on tourism. As a gesture to boost tourism, many members of parliament and the British leadership are vacationing at home this year.

Introduction   •   Global Stock Market Indexes   •   Recap of Global Markets   •   Currencies   •  Indicator Scoreboard

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