Weekly Round Up
Despite a shaky start with the FTSE 100 Index falling to 6,830 points on Tuesday afternoon, UK markets ended the week in positive territory.
The index rose 1.26%, bouncing back from a low not seen since April to end the week at 7,022 points at the time of writing.
Investors welcomed strong corporate results during the week while awaiting a key PMI survey, which will provide insight about the state of the UK economy in early July ahead of the final stage of restrictions easing.
British retail sales rose 0.5% in June, slightly above market expectations, up by 9.5% compared with their pre-pandemic February 2020 levels. According to data from the Office for National Statistics a 4.2% rise in food sales, thanks to Euro 2020, helped offset a decline in clothes and household goods. Meanwhile consumer morale improved in July to its strongest level in 17 months.
In Europe stock markets opened higher on Friday, ending a volatile week on a positive note, helped by a supportive tone from the European Central Bank. The ECB did not adjust its benchmark interest rate or its commitment to purchase €1.85 trillion in bonds through March 2022 at its latest meeting on Thursday.
However, the ECB has tied its new forward guidance on interest rates more closely to inflation, suggesting they are not likely to rise anytime soon. With an inflation projection currently of 1.4% year-on-year for 2023 and the new forward guidance, Eurozone interest rates are set to remain low for the foreseeable future.
On the economic data front, the Eurozone’s private sector activity expanded to its highest levels in 21 years following the latest reopening efforts.
US stocks traded higher on Friday amid strong earnings reports, with results from AT&T, Abbot, Biogen and Blackstone surprising on the upside. Meanwhile the IMF announced on Thursday the US Federal reserve has been highly effective at managing the Covid-19 crisis and supporting recovery with its commitment to overshoot a 2% inflation target in the near term.
Despite a warning by the US CDC that the Delta variant is one of the most infectious respiratory diseases ever seen by scientists, spreading quickly through the US and accounting for over 83% of sequenced cases in the country, investors remained optimistic with the Dow Jones Industrial Average, S&P 500 and the Nasdaq all set to end the week higher.
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