Global equities higher as focus shifts away from politics and trade wars

FTSE traders experienced a roller coaster ride in trading on Tuesday, after stocks rose and fell before rebounding again on the US open, tracing Wall Street higher. With the political picture looking more stable today, as Theresa May survives yet another political storm, leaving the pound to shift its focus back to data; more specifically industrial and manufacturing production and the first monthly GDP release.

Whilst the GDP printed in line with expectations at 0.3%, both manufacturing and industrial production figures failed to live up to forecasts, pulling the pound off session highs of $1.33. There was little in the release to suggest that the BoE will be raising rates in three weeks’ time.

Barclays Report Rise In Consumer Spending
The pound didn’t remain downbeat for too long, after Barclay’s consumer spending report showed that spending increased 5.1% year on year and more importantly non- essential spending jumped 5.5% year on year, its biggest increase in 18 months. These figures highlight the feel-good factor from the world cup and the warmer weather, which has encouraged consumers to loosen the strings round their purses. Furthermore, the figures only take into account the first England match meaning that July could see some bumper figures as well. Higher spending suggests a happier consumer and points to an increase in inflation down the line.

Increased consumer spending data from Barclay’s, in addition to encouraging results from clothes retailer Matalan was sufficient to boost Next from a second straight session, up 1.7% on the day. Luxury fashion retailer Burberry was also trading 2% higher ahead of a trading update tomorrow.

Wall Street Rallies for 4th Straight Session
Wall Street has opened on the front foot extending gains from the previous session, one of the strongest sessions in over a month. An extended silence from trade war rhetoric has enabled investors to focus more attention on fundamentals of economic and earnings growth and less attention on uncertainties surrounding trade and tariffs which had previously been weighing on sentiment and dampened market rises. That is not to say that these trade war concerns have disappeared, but simply they have been put on the back-burner, with earnings season now set to take central stage.

Expectations are for earning season to deliver a 20% year on year increase in S&P earnings, down slightly from the 24.8% of the previous quarter, but still the second-best quarter in 8 years. Earning season unofficially kicks off on Friday with 4 of the biggest US banks.

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