- The UK stock-market had a strong start to the week, following Asian markets higher after concerns appeared to ease over China’s recent regulatory crackdown.
- On Wednesday, PMI data from IHS Markit indicated a further slowing for the UK Services sector with data for July showing the weakest rate of growth since March. The IHS Markit/CIPS services Purchasing Managers’ Index (PMI) fell to 59.6 in July, down from 62.4 in June. Tim Moore, Economics Director at IHS Markit said: “July data illustrates that recovery speed across the UK economy has slowed in comparison to the second quarter of 2021..”
- At its latest meeting the Bank of England left interest rates and QE unchanged but said that “modest tightening” is possible. The central bank now expects interest rates to rise from 0.1% to 0.2% in 2022.
- Eurozone Services PMI data reported at 59.8 for July, indicated the fastest growth since June 2006 with easing virus restrictions and further vaccination progress boosting demand.
- Our Breadth indicator stayed positive but our Momentum Indicator ticked lower again.
- Renewed worries about the spread of the coronavirus delta variant and global growth weighed on US stocks on Monday.
- More voices have been added to the call for the Fed to begin tapering the bond buying program with inflation concerns increasing. The Fed’s Christopher Waller told CNBC that the Fed “could be ready to do an announcement by September”.
- Richard Clarida, Federal Reserve Vice Chair, is expecting the central bank to hit its economic targets by the end of 2022 and start raising rates again in 2023. He said on Wednesday, “There are risks to any outlook, and I believe that the risks to my outlook for inflation are to the upside”.
- Stocks recovered strongly from the weak start to the week helped by strong corporate earnings and positive economic data. Friday’s jobs report was stronger-than-expected. The forecast was for 845,000 jobs to be added to the economy in July – the actual number was 943,000, sparking concerns that the Fed may begin tapering earlier than expected. The market responded well though, closing near the highs of the week.
- Our Breadth Indicator stayed negative and our Momentum Indicator ticked lower again.
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