Here are this mornings headlines:
Friday saw the FTSE back above 7,000 whilst US markets closed at another record high, making it more than a full recovery from last Monday’s falls. The US market was given a boost with strong earnings numbers from last quarter, though this week will be the more interesting with the tech giants all set to release their performance figures for the quarter where the world finally began to be less dependent on them in their day to day lives than they have been for the entire year before that. These stocks have an outsized impact on the wider market as amazingly Amazon, Apple, Facebook and Alphabet (Google) make up almost 25% of the entire market cap of the S&P500, so this is going to be a big week and could set some of the scene for the usually quiet holiday month ahead of us.
Another significant scene setter will be the Federal Reserve meeting and press conference this Wednesday: The Dollar has had a good July so far and is trading close to its year to date highs as a result. To continue to move higher it will probably take a pretty upbeat tone from Jay Powell, though he’ll still want to tread a cautious line, particularly as the US is seeing a big uptick in Covid case numbers which might mean a reversal of their unlocking in certain cities and states. If Mr Powell doesn’t deliver on Wednesday, then the market has a second chance with US GDP numbers on Thursday, where expectations are for year on year growth of 8.3%! – though high expectations can be hard to meet and disappointing when missed, so this is till a ‘one of two ways’ event.
The US could also finally get an infrastructure package across the line this week, with one senator in the bipartisan working group saying he thinks the bill will be ready today, having failed in a first vote last week. It’s all getting a little complex, with roadblocks coming in from both sides of the aisle and Nancy Pelosi has said she’ll hold things up until a larger bill goes through, but in doing so might risk everything falling apart and coming away with nothing – which seems like too much of a gamble for the Speaker of the House to take.
Closer to home: The UK government is reportedly working out how to ban the involvement of Chinese nuclear Power Group from all future nuclear projects in the UK. This is a big deal, as CGN are involved in Hinkley Point, Sizewell C and are also meant to be involved in Bradwell B, in Essex. The government is clearly concerned that such a dependency could come back to bite them further down the line, but there would be the not so small details around the legal fallout and also how these might be funded, or even viable, without Chinese money. CGN were put on a US export blacklist a couple of years ago, having allegedly stolen US technology for military purposes.
UK Covid Cases
Covid cases in the UK have fallen for the fifth day in a row, with 29,000 cases reported yesterday. We’ll have to wait until next week before we start to see the impact of last week’s total unlocking and whether that places upward pressure on the stats, but for now BoJo and co. will be encouraged that their move was the right one – something he could do with as a YouGov poll released over the weekend has shown the Conservative lead over Labour has dropped from 13 points to four – albeit that’s totally academic until 2024 when we gear up for elections!
German politicians have floated the idea of tough restrictions on the un-vaccinated and possibly even making vaccines mandatory. They’re not unique in making such deliberations, with other European politicians wanting to severely restrict the activities of those without a vaccine in a bid to slow things down. Talking about this and making it happen though are two very different things and it will be a very brave politician that tries to push that through – though Angela Merkel only has a couple of months left in her job, so maybe she’s the one to do it – might be a big gamble for her to pin her legacy on though.
Tunisia is seeing what is being described as a coup: The president has sacked the government and frozen parliament as he has said he will assume executive authority alongside the new prime minster. Crowds have taken to the streets in support of President Saied, but there are concerns that there will be opposition to his moves and that things could spiral.
Have a great week