Royal birth news is dominating headlines, helping to distract from an uneventful morning for financial markets. The FTSE 100 gained around 1.5% last week, shrugging off weaker technology earnings and some jitters surrounding Ben Bernanke, and it still looks to be in the mood to challenge the highs witnessed in late May around 6800. With UK earnings more abundant to go with a US season that is now in full swing, there is lots of potential for fresh gains in the week ahead.
A strong victory for the Liberal Democratic Party in Japan has put markets on the front foot. Sentiment has been buoyed by the hope that the result will embolden Prime Minister Abe to go yet further in his quest to put the fire back into the Japanese economy. With no central bank activity this week, investors are left to focus on earnings. Philips, the Dutch consumer and healthcare giant, was able to report further progress in its cost-cutting efforts, while the healthcare division’s performance was better than expected, mirroring the progress made by rival General Electric. Mining group Bumi has returned from a three-month suspension to see its shares drop another 6%, but anyone hoping that this particular saga has come to an end is likely to be severely disappointed.
US earnings and housing data take centre stage this afternoon, but the week could get off to a difficult start if Texas Instruments emulates its tech cousins and falls short of expectations. More good news on US housing could help dispel any negative sentiment, however, as we continue to watch this sector finally make its contribution to the US economic recovery. Ahead of the open, we expect the Dow to start 30 points higher around 15,577.