Market Update: A busy day ahead for companies and central banks – 01.08.2013

Source: Henderson Global Investors

US equities finished flat yesterday in volatile trading (S&P 500 -0.01%; Dow Jones -0.1%). US gross domestic product (GDP) grew at an annualised rate of 1.7% in the second quarter, beating consensus expectations for a figure closer to 1%, while comprehensive revisions to the way that US GDP is calculated also provided food for thought. Separately, ADP’s payrolls report revealed the US had created 200,000 private sector jobs in July, above forecasts for 185,000, while revising its June figures upwards. Although these numbers have increased the chances of a strong non-farm payrolls report on Friday, the Federal Reserve’s policy statement, also yesterday, provided some reassurance about the tapering of its asset purchases. Sounding a dovish note, the bank voiced concerns that persistently low inflation could hamper economic expansion.

Overnight, Asian stocks digested news that China’s official manufacturing purchasing managers’ index had expanded slightly in July, although HSBC’s unofficial reading continued to show contraction. More helpful, however, were reports that the People’s Bank of China had made a second cash injection into the money markets to ease liquidity problems.

Today will be one of the busiest days of the year for worldwide corporate reporting – results this morning have been generally well-received. At the time of writing, European markets are moving higher (FTSE 100 +0.2%; FTSE Eurofirst 300 +0.5%). Central banks will continue to be in focus as the European Central Bank and Bank of England announce the outcome of their policy meetings later.