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Central bankers have wrought much damage on equity markets in recent days, suggesting that hopes of a quiet August this year have so far been sorely misplaced. Mark Carney has made his name as a force to be reckoned with, having lobbed hand grenades in the general direction of both sterling and the FTSE 100. Both markets are quiet now, but the effects of yesterday’s press conference will continue to be felt for some time. Meanwhile jitters about US Federal Reserve tapering continue to be felt, but the relative resilience of the S&P 500 will provide comfort for those still expecting further gains in the market rally.
In London a dearth of economic data means that corporate figures have become the main focus, with insurers being the centre of attention. It appears to be a case of ‘the good, the bad and the ugly’, at least in terms of the reception given to results from (respectively) Aviva, Standard Life and Schroders. However, Aviva’s surge this morning is more a reflection of the heavy beating the shares have taken, and its Herculean turnaround programme has a long way to run yet. Regardless of performance, all three shares offer dividends well in excess of the Bank of England’s unchanging base rate, so we can rest assured that the yield hunt is not finished yet.
With a quiet afternoon for economic news in prospect, traders will continue to keep a lookout for any tapering-related comments. This still seems to be the key element that will exercise investor worries throughout the month, but unfortunately for all concerned we won’t really be able to gauge the full impact until the dreaded moment actually arrives. And we are still no closer to knowing that small piece of information. Ahead of the open, we expect the Dow Jones to start 45 points higher at 15,515.