Corporate reports were also driving price action with a slew of earnings in both the Europe and the US.
It came as natural gas prices slumped this morning as EU buyers plan to cave in to Vladimir Putin's demand for payments in roubles. Benchmark European prices fell as much as 6.9% following two straight days of gains.
European energy firms including Uniper and Eni are now preparing to pay into accounts at Gazprombank, according to reports, allowing them to keep getting supply from Russia without violating sanctions.
This is despite Brussels urging firms to ignore demands from the Russian president.
On Wednesday, Gazprom has confirmed it had turned off the taps to Poland and Bulgaria as they had failed to pay in roubles, saying that supplies will be halted until payment has been made.
The American economy fell by 1.4% in the first quarter of the year, a significant drop in comparison to 2021's fourth-quarter growth of 6.9%, and far worse than the 1% growth economists had predicted.
The figure was the first contraction since the height of the pandemic in 2020, suggesting America’s economy is at greater risk of a downturn.
President Joe Biden insisted the US economy remained strong on the back of the surprising data.
"The American economy – powered by working families – continues to be resilient in the face of historic challenges. Last quarter, consumer spending, business investment, and residential investment increased at strong rates. The number of Americans on unemployment insurance remains at the lowest level since 1970," he said.
"While last quarter’s growth estimate was affected by technical factors, the United States confronts the challenges of Covid-19 around the world, Putin’s unprovoked invasion of Ukraine, and global inflation from a position of strength."
Richard Flynn, managing director at Charles Schwab UK, said: "Today’s figures confirm there is now no shortage of headwinds facing the US economy, including the consequences of the Russian invasion of Ukraine, persistently high inflation, and tightening monetary policy.
“Consumer confidence is low. We’re in a period of counter-cyclical inflation – when high prices put downward pressure on demand and growth. The Fed’s eye is on inflation as it tightens monetary policy in a bid to slow aggregate demand and cool price rises."
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It comes as April has been a disappointing month for Wall Street in particular, with the tech-heavy Nasdaq hitting one-year lows last night, before managing to finish more or less unchanged.
However, the US dollar surged, hitting a five-year high against a basket of currencies.
“While the focus has been predominantly on the decline in the Japanese yen this month, attention is now turning towards the euro, after the single currency slipped below 1.0630 and its 2020 lows, raising the prospect of a move towards 1.0340, and a potential move towards parity,” Michael Hewson of CMC Markets said.
“If this were to happen it would present an enormous challenge for the European Central Bank, who are trying to manage market expectations around possible rate hikes in the face of rising inflation.”
Elsewhere, Asian markets achieved some much-needed gains on Thursday following a tough week following pledges of further fiscal support from Chinese policymakers.
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