A day after the US Federal Reserve signalled patience in their approach towards raising interest rates, a Labor Department report showed that US gross domestic product grew at a 0.5 per cent annual rate in the first quarter.
"The economy essentially stalled in the first quarter, but that doesn't mean it is faltering," Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, told Reuters.
"Some of the restraints to growth are dissipating. Growth is likely to accelerate going forward."
With a potential US interest rate increase pushed further out, the greenback weakened, which supported commodities denominated in the currency. "
While the central banks will continue to have an enormous impact on the market, the weaker [US] dollar and stronger crude oil prices will support gains in the market," Keith Lerner, chief market strategist at SunTrust Private Wealth Management, told Reuters.
Indeed, gold analysts polled by Reuters have raised their forecasts for the precious metal. The survey of 30 analysts at banks and trading houses carried out this month returned an average 2016 gold price forecast of US$1,209 an ounce, up from U$1,118 in a similar poll in January, according to Reuters.
"The chief supportive factors are the shift in Fed stance, the weaker dollar and the prospect of inflation," Macquarie analyst Matthew Turner told Reuters. "The first two have raised the base price, the third is why we expect higher medium-term prices."
There was solid earnings news. Shares of Facebook soared, up 8.4 per cent as of 2.12pm trading in New York after touching a record high earlier in the day, after the company posted better-than-expected earnings.
"FB remains in a class by itself across the combination of scale, growth, and profitability," JP Morgan Securities analyst Doug Anmuth said in a research note, according to Reuters. "While there are broader concerns of macro softness toward the end of 1Q, Facebook isn't seeing them."
Fresh deals added support. Shares of St Jude Medical jumped after Abbott Laboratories agreed to buy it in a deal valued at US$25 billion, while DreamWorks Animation SKG soared after Comcast agreed to buy it for US$3.8 billion.
In Europe, the Stoxx 600 Index ended the day with a 0.2 per cent advance from the previous close. The UK's FTSE 100 index crept 0.04 per cent higher, while Germany's DAX index added 0.2 per cent. France's CAC 40 index slipped 0.04 per cent."
The last thing I do really expect is a sustainable rally in stock prices," Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany, told Bloomberg. "Earnings in a nutshell look OK, but as earnings estimates further down the road are still too high, there will be a negative trend in earnings revisions."
