LONGER PERIOD OF STIMULUS BY CENTRAL BANKS FUELING EQUITY RALLY

European stocks rose for a fourth session on Friday, set to end the week slightly up despite Monday's sell-off, as investors welcomed a batch of strong corporate results during the week, signs of a longer period of stimulus by the European Central Bank and upbeat PMI data. The European Central Bank tweaked its guidance on Thursday, pledging to keep inflation rates at record-low levels until inflation "durably" reaches 2% target and retaining the pace of asset purchases programme at €20 billion per month. On the economic data front, the Eurozone's private sector activity expanded by the most in 21 years, following the latest re-opening efforts. Whereas Asian share markets were in a mixed mood on Friday after a volatile week in which sentiment over global growth waxed and waned with every new headline on the Delta variant. A slew of surveys on July manufacturing are expected to show a slight softening of activity in Europe and the United States, though from very high levels, while Asia looks more vulnerable.

UK

The FTSE 100 bounced back above the 7,000 mark on Friday, led by heavyweight miners and insurance stocks and as investors welcomed strong corporate results from Vodafone as the mobile operator reported a better-than-expected 3.3% rise in first-quarter service revenue. On the economic data front, British retail sales rose 0.5% in June, slightly above market expectations, and were up by 9.5% compared with their pre-coronavirus pandemic February 2020 levels. Meanwhile, consumer morale improved in July to its strongest level in 17 months; while a PMI survey signaled a sharp slowdown in UK business activity growth to the weakest since the easing of lockdown restrictions began during March.

USA

All three main stocks indexes in the US were in the green on Friday, a 4th straight session of gains, as investors' focus switched to strong corporate results. The Dow Jones added almost 200 points before paring some gains, the Nasdaq 100 hit a fresh intraday high and the S&P 500 hovered at record levels. American Express and Honeywell easily beat market forecasts on earnings while Kimberly Clark disappointed. On the data front, the Markit manufacturing PMI rose to a fresh high although price pressures and material shortages continue to weigh while the services sector slowed amid labor shortages and difficulties acquiring stock. On the week, the indexes are on track to book gains, rebounding from Monday's sharp sell-off related to concerns over coronavirus delta variant and slower global growth.

JAPAN

The Nikkei 225 surged 445 points or 1.6% to 27,833 in early deals on Wednesday, recovering from 1% losses in the prior session which took the index to its lowest since early January, as traders were upbeat after all three major US stock indexes gained significant ground overnight following a steep sell-off on Monday. Risk appetite was also buoyed by data showing exports from Japan soared 48.6% yoy, rising for the fourth month in a row, to a three-month in June; while imports grew more than estimated, advancing for the fifth straight month.

CHINA

The Shanghai Composite Index lost 24 points or 0.7% to close at 3,550 on Friday after closing at a three-week high in the prior session, as traders were downbeat after reports that the floods drenching central China are threatening supply chains for goods. Risk appetite was also dragged down by news that US initial jobless claims unexpectedly rose to a two-month high in the latest week; while the Chicago Fed National Activity Index fell in June. On the policy front, the PBoC reportedly will keep land and home prices stable as property lending slowed following efforts to pressure banks supporting small businesses. Regarding the pandemic, China's eastern province of Jiangsu found 12 new COVID-19 cases Thursday, taking the total tally to 23, in its first local outbreak since the pandemic began last year. For the week, however, the index was up 0.3%, on optimism that fiscal and monetary stimulus will continue to support the economic recovery.

INDIA

The S&P BSE Sensex closed slightly up at 52,976 at the end of a volatile session on Friday, driven by gains in IT stocks and a stellar debut by food delivery startup Zomato, which ended 65% above its offer price at INR 125.2. On the other hand, telecom shares were under pressure after India’s top court rejected a plea by mobile carriers seeking corrections of what they called errors in the government’s calculation of their dues. Investors also awaited quarterly results from heavyweight Reliance Industries due later in the day. For the week, however, Sensex lost 0.3% on signs that the global economic recovery might have reached a peak due to a surge in the Delta variant of the coronavirus and rising inflation.

Investors are now looking ahead to the Federal Reserve's policy meeting next week where more discussion about tapering is expected, though Chair Jerome Powell has repeatedly said the labour market remains well short of target. He also still argues that the recent spike in inflation will prove fleeting, which may be one reason bond markets have been rallying so hard.