Weekly Market Recap: 21st July 2014

Market Recap

Global equity markets finished the week marginally higher despite a deterioration in the geopolitical situation worldwide and mixed economic data. There was only a brief wobble in equity markets on Thursday following the news that a Malaysian Airlines plane was shot down while there has been little reaction to the indiscriminate bombing of Gaza by US-backed Israel. Although equity markets have shrugged off the geopolitical risk and the slowdown in the global economic recovery the bond markets this year have delivered a much less sanguine assessment of events. Last week, the yield on the 10-Year German Government bond yield hit a record low of 1.15%.

Week Ahead

European equity markets have opened lower with the focus on the impact of sanctions on Russian after a mixed session in Asia overnight.

Key macro data this week includes the flash global PMI data, a useful leading indicator on the outlook for the global economy. The UK will release the first estimate of second quarter GDP which is expected to show growth of 0.8%, in line with the first quarter. The Bank of England will release the minutes of their most recent monetary policy meeting with investors searching for any clues on the timing of the first interest rate and their plan for normalising monetary policy. In the US, we will get an update on the housing market with reports on new and existing home sales while durable goods orders will be in focus on Friday after a much weaker than expected reading in May.