The Tuesday note - 2 May 2017

• The FTSE 100 closed on Friday at 7,203.9, up 89 points on a week earlier thanks to better than expected company quarterly reports. Ten year Gilt yields stood at 1.09%. 
• US GDP growth on an annualised basis slowed to just 0.7% in Q1 2017, which was below both the consensus forecast of 1.2% and the Q4 2016 figure of 2.1%. This was partly due to a slowdown in consumer spending. 
• In the UK, GDP increased by 0.3% in Q1 2017 quarter-on-quarter (or 1.2% annualised), down from 0.7% in Q4 2016. The UK consumer also paused for breath, although growth accelerated for the business and financial services sector. 
• Last week saw strong results from leading US tech firms, with Amazon reporting a 41% increase in net income to $724 million in Q1 2017. Also, Alphabet (the owner of Google) reported a 29% rise in Q1 profits to £5.4 billion. 

Chief Economist comments: 

The UK and US economies have slowed, and this is good news, particularly given that consumers reining back was the main reason. The problem with a long period of high GDP growth fuelled by consumer spending is that it usually ends badly. A combination of rising inflation, and the arrival of post-Christmas credit card bills has brought about some welcome restraint in Q1. The UK economy needs to rebalance towards companies rather than consumers driving growth, and the latest GDP figures suggest this is happening.