Weekly Round Up
UK markets had a positive week with the FTSE 100 Index ending firmly in the green at 7,216.14, gaining 1.54% at the time of writing.
The FTSE is now trading at its highest level since February 2020, as investors welcomed a batch of upbeat economic data, as well as strong earnings reports.
The UK economy grew more than expected in June as restrictions were lifted, while exports of goods to the EU recorded above pre-Brexit levels for a second month. The yield on UK 10-year government bonds stood at 0.6% during the second week of August, remaining close to its highest level since mid-July, due to the Bank of England’s hawkish turn and expectations of early tapering by the US Federal Reserve.
European stocks rose steadily on Friday, following a nine-day rally that sent major indexes in the region to record-high levels.
Sentiment has been supported by a strong earnings season and the prospect of a solid economic recovery in Europe, assisted by continued policy support from the European Central Bank. The unemployment rate in France fell to 8% in the second quarter of 2021, from 8.1% in the previous quarter, as the number of unemployed people decreased by 16,000 to 2.4 million. Wholesale prices in Germany jumped 11.3% year-on-year in July of 2021, the highest rate since October 1974.
In the US, the S&P Index and the Dow Jones Industrial Average hit all-time highs this week after robust corporate profits ignited optimism on Wall Street that US equities will extend their bull run.
The latest quarterly reporting season showed US corporate earnings, revenues and profit margins expanding at their strongest pace since 2008. Economic growth has been running at the best pace in decades which has been a tremendous tailwind for earnings. The S&P 500 is now up more than 18% so far this year and has roughly doubled from its March 2020 lows, when pandemic lockdowns threw global financial markets into chaos.
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