GDP: Contraction Less Than Expected

This post is from CNBC producer Robert Hum.

The markets are up about 2.5% in early morning trading on strength overnight in Asian markets, solid earnings reports, and a better-than-expected GDP number.

Asian markets surged overnight, as central banks in Hong Kong and Taiwan cut their interest rates, following the Federal Reserve’s rate cut yesterday. Hong Kong closed up 13%, South Korea closed up 12%, Singapore closed up 8%, while Taiwan finished the day up 6%. In Japan, the Nikkei leapt 10% on expectations that the Bank of Japan will also cut interest rates on Friday, which would be the country’s first rate cut since 2001.

U.S. GDP fell 0.3% last quarter, but the contraction was less that what analysts had expected. Nevertheless, GDP had its biggest fall in 7 years. Contributing to that decline was the 3.1% drop in consumer spending, which was its largest decline since 1980.

Meanwhile, the dollar continues to move lower today with the U.S. Dollar Index down 2.9% over the last two days. 3-month U.S. Dollar Libor also fell to 3.19%. down from 3.42% yesterday.

In earnings news:

ExxonMobil reported record profits, beating analysts’ estimates. Net income jumped 58% from last year to $14.8 billion. Higher prices helped its upstream earnings surge 74%. Additionally, as crude oil prices began to fall, margins in the company’s downstream business improved – helping earnings in that division rise 51% from last year.

Deutsche Banksurprised investors with a profit in its Q3. Its earnings benefited from some new EU accounting rules, which limited the amount of the company’s writedowns in the quarter. While its CFO said the company is not in need of capital, he said it is “unrealistic to assume” that the bank will pay the same dividend this year as it did last year. Deutsche Bank and many of the other European banks are trading up double-digits.

Colgate-Palmolive’s EPS beat estimates by a penny. The company saw strength in its international sales, and just like P&G,Kraft, and Kelloggyesterday, it benefited from price increases it set during the quarter.

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