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Markets underwhelmed by US growth surge

Wall Street wavered Friday despite data showing the US economy expanded at the fastest annual growth rate in almost four years.

The world's biggest economy grew at an annual rate of 4.1% in the second quarter, the fastest rate among industrialised nations, the US Commerce Department said.

The figure was roughly in line with the forecasts of analysts, who had expected that US President Donald Trump's massive $1.5trn of tax cuts that kicked in at the start of the year would fire up economic activity.

As the figure came in as expected, Wall Street barely moved. The Dow was up less than 0.1% in late morning trading, with disappointing earnings dampening sentiment. The S&P 500 and Nasdaq Composite were both in the red.

"A four-year high GDP reading from the US meant little to the markets on Friday, the number - much-heralded by Donald Trump - failing to significantly move the needle as the week wrapped up," said Spreadex analyst Connor Campbell.

"Perhaps investors doubt the sustainability of such a performance, alongside the fact that there are still 2 more readings to come, with those revisions having a tendency to be fairly chunky," he added.

'Come off the boil'

While the strong growth rate was welcome, analysts said investors have plenty to worry about going forward.

"The US economy is likely to come off the boil in the coming quarters, as the boost to growth delivered by the tax cuts begins to wear off, trade restrictions and an overall slowing of the global economy start to weigh on exports, and further interest rate hikes tighten financial conditions," said economist Pablo Shah at the Centre for Economics and Business Research.

He said the growth rate was none the less impressive and that the strong labour market together with still accommodative fiscal and monetary policies mean that the US was likely to remain at the top of the growth pack among advanced nations.

Twitter's wings clipped

Wall Street's internet frenzy continued on Friday.

Twitter shares plunged over 18% after the social network warned it could potentially lose millions of users as it cleans up the platform.

The slump came despite a record profit for Twitter in a quarterly report which also said the number of users could fall as part of the effort to weed out abusive and fake accounts.

"Twitter has provided yet another knockback for the tech-focused Nasdaq index, with the social media platform following Facebook lower," said market analyst Joshua Mahoney at IG.

The Nasdaq was down 0.7% in late morning trading in New York.

Facebook on Thursday warned of weaker growth, sending its shares falling nearly 20% and wiping out some $100bn in market value.

Investors have been concerned about the financial impact of greater EU privacy protections, which many major internet firms are applying to all their users, as well as greater public concern about misuse of their data.

European shares closed with higher gains. London finished 0.5% higher, with shares in telecoms group BT rising more than 5% after posting better-than-expected first-quarter earnings.

Paris climbed 0.6% while Frankfurt added 0.4% in value, aided partly by this week's easing in EU-US trade tensions.

Asian stocks mostly edged higher Friday with Tokyo buoyed once more by a weaker yen, which helps exporters.

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