Afternoon comment courtesy of Spreadex – 30/07/13

The FTSE 100 is trading moderately higher as we approach the U.S open on the back of encouraging earnings from several leading companies. ITV shares surged 4.46% on the back of strong H1 results, whilst Weir Group gained 3.47% after reporting on improved outlook for oil. Despite this, the markets are struggling to make new highs which could be a sign of a potential sell-off. 

With the FTSE hitting a 13-year high of 6,875 in late May, expectations of a gradual scaling back of stimulus by the Federal Reserve caused the last sell-off with the FTSE falling to 5,897 in June. With the Federal Reserve meeting over the next two days to discuss this sensitive topic, there’s no doubt that many investors will be fearful of a similar scenario playing out. 

In another clear sign that the Euro zone recovery is on the right tracks, the latest economic sentiment data for the region has shown that morale has reached a 15 month high. The single currency bloc of 17 countries is stuck in the longest recession in its history and the chance of a swift recovery are limited by record high joblessness and stringent austerity measures. However, confidence improved across all areas except construction. 

The S&P 500 advanced 4.9 percent this month, the most since January, as companies from Facebook Inc. to Visa Inc. reported better-than-estimated earnings. Of the S&P 500companies that posted quarterly results, 73 percent have exceeded analysts’ estimates for profit and 56 percent have topped sales projections.