THE markets enjoyed a period of relative calm last week with indexes across the world posting modest gains and they start this week in similar fashion.
Continental European markets followed Asia higher although, in the UK, the FTSE 100 was slightly lower on opening on Monday morning.
The news focus for the coming days is likely to be the climate, with distressing images coming through of wildfires in the US, Turkey and Greece coupled with flooding in Germany and China.
In case it was needed, climate scientists issued more warnings about the future direction of global warming in new analysis from the International Panel on Climate Change. It said that temperatures are likely to rise by more than 1.5 degrees above pre-industrial levels, breaching the target set at the 2015 Paris climate agreement, and making extreme weather events more likely in the future.
So far, however, the prospects of property losses and a huge clean-up bill has not moved global markets, which have instead chosen to focus on improving economic data.
Inflation data for the US is due on Wednesday with a slight month-on-month cooling of price rises expected. Inflation in the US is still running above 5%, however, and in the past week another two senior Fed policymakers hinted at the need to dial back stimulus soon.
That follows the Bank of England last week raising its expectations for inflation in the UK. The mood music at the Bank appears to be changing, albeit slowly, with inflation now expected to rise to 4% this year compared to a previous forecast of just 3%.
Markets, however, took that news in their stride but inflation and the prospect of an earlier return to more normal policy is likely to be a focus for the months ahead.
The other economic news coming up this week includes both Chinese and German inflation data, while back in the UK the ONS will publish the latest GDP estimate for the second quarter. Expectations are for annual growth running at 4.8%.
The corporate news this week is quieter as earnings season comes to an end but will feature updates from some of the companies most affected by the Covid-19 pandemic. TUI and InterContinental Hotels both provide updates. There will also be results from Entain – owner of the Ladbrokes and Coral bookmakers – and Flutter, the online gaming company, which may provide news of a spike in gambling levels during lockdown.
Perhaps not entirely unrelated are results from Hargreaves Lansdown, the UK’s largest investing platform, which on Monday reported a 17% spike in assets over the past year – including the news that more younger people are choosing to invest their money. The company highlighted extra trading volumes around so-called meme stocks – such as Gamestop which was the subject of huge speculation by retail investors earlier this year.
Despite the positive flows, Hargreaves still saw its share price fall after the announcement thanks to the news that costs had risen by even more, at 24%.
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