The afternoon on the London market is as gloomy as the weather outside. Having struggled to catch a bid all day, stocks are in full retreat around the world, with the Nasdaq seemingly the only small pool of optimism left. In some respects, the moves we have seen this week are odd; M&A activity, exemplified by the FT and now Anthem/Cigna, continues to be strong, while Amazon’s figures show that the American consumer has plenty of desire to open his wallet. And yet investors have no enthusiasm to buy into an earnings season that, even by recent standards, had the bar set particularly low in terms of expectations. On a price/sales multiple, US stocks now look more expensive than at any time since 1999/2000, and that is not a particularly pleasant parallel for any investor to contemplate.
Fortunately for beleaguered European and UK equities, the week ahead is jam-packed with corporate news, not least from the UK banking sector. Barclays will command plenty of attention, given its recent management kerfuffle, but the sheer volume of news reports means that there is likely to be something for everyone.
The focus will also shift back to the dollar (not that it ever really leaves it), as the Fed meets before a summer break; no change is expected this time round, but the statement will be keenly read for any hints that September will see the fateful day arrive. Dollar weakness helped to massage equity returns in recent years, but the rising greenback means investors need to adjust to a world of weaker performance, even without any deterioration in economic data.