Traders Watch American Economic Information

Kimberly Watson, Editor in Chief
March 30, 2012 /

This week the focus for traders is on reports from the world’s largest economies. The United States is undergoing an upward trend whereas China is showing signs of a slowdown.

In America, the economic data has of late, managed to outperform market expectations, as compared to Canada where the gross domestic market is expected to grow by about only 0.1 per cent. This is compared to 0.4 per cent in December.

It is forecast that the economic growth should be on track for a 2.5% gain in the first quarter. This is an improvement of 1.8% over last years fourth quarter, reportedly due to the economic growth of exports. This is reflecting with an improving American economy. This is despite the local markets being lower last week and the S&P 500 down about one per cent. It followed a rise of about 10.3 per cent so far for the year and as much as 26% from its October low.

Because of the close economic ties, the investor sentiment in Canada has the tendency of following the U.S. ties.

This pickup in the United States is in sharp contrast to that of the Chinese economy that has unsettled some investors. It has raised concerns for demand of Canadian resources in the future, which is why the majority of companies are trading on the TSX.

BHP Billiton has concerns regarding the outlook of China, due to its influence as the world’s second-largest economy. Therefore, it has shored up the global economy and debt collecting over the last few years. The Chinese government has presented plans to down-grow to 7.5% for this year, as against the 8% target it has used since 2005.

It further plans to focus its growth on consumer spending, rather than on that of infrastructure spending. This would prove detrimental to Canadian resource companies. It is reported that Robert Gorman of TD Waterhouse has said that accordingly the Chinese numbers are being very closely watched.


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