While France has registered zero GDP growth for the second quarter, Germany's GDP has grown 0.3% quarter-on-quarter compared to a Reuters forecast for a 0.2% rate. In the case of France, investors were worried that growth would be headed in the negative direction signalling a recession. But this appears not to be the situation.
However the Euro Area GDP has contracted by 0.2% in 2Q from prior quarter, Bloomberg reported.
The GDP figures of France and Germany do not feature as a bad news; but neither it is a good news. And the Euro Area contraction could herald a stimulus.
“There was a positive news from Germany and France, so that has helped lift the base metals from negative opening to positive market. A slightly better-than-expected growth data from Germany and France helped ease concerns about the two biggest economies of the euro zone.” said Amrita Mashar, Manager-Research, Commodity Online.
Meanwhile, crude oil futures bounced back, gold remained firm and importantly copper emerged out of red as investors clung to stimulus expectations.
The fact that gold and base metals are remaining correlated at the same time in the same direction speaks volumes about the conflicting interests and signals a lack of direction in the market.
On the one hand markets are expecting stimulus measures from various quarters, especially Japan, China, US and Europe. On the other, a cardinal fear of a complete global meltdown deters them.
However some of the Japanese bank officials are reportedly favouring a stimulus package. Europe contraction is yet another case for stimulus. Chinese slowdown warrants a stimulus and US situation is possibly demanding one.
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