Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Lloyds Banking Group has swung to a first-half profit and reintroduced dividend payouts to shareholders, boosted by a buoyant housing market and recovering economy.
The bank posted a pre-tax profit of £3.9bn for the six months to June, beating analysts’ expectations of £3.1bn. It compares with a loss of £602m in the same period last year, when it set aside billions of pounds to cover a potential surge in bad loans because of the Covid-19 pandemic.
Asian markets have bounced back from their sell-off earlier in the week, as China tried to calm investor nerves by telling foreign brokerages not to “over-interpret” its latest regulatory actions on education companies and overseas listings. Regulators reportedly called banks overnight to tell them that Chinese firms would be allowed to list in the US as long as they met listing requirements.
Japan’s Nikkei is up 0.7%, Hong Kong’s Hang Seng has gained 2.9% and the Australian market has advanced 0.5%. China’s blue-chip CSI 300 index gained 2% and the Shanghai Composite Index rose 1.5%.
European markets enjoyed a welcome recovery yesterday after two days of losses, closing higher on the back of some positive company results and optimism over an easing of some travel restrictions. Markets are expected to open slightly lower today, though.
Wall Street ended the day mixed, with the Nasdaq gaining 0.7% while the Dow Jones and S&P 500 closed slightly lower, after the latest US Federal Reserve decision moved the bond tapering argument onto next month’s Jackson Hole gathering. The Fed left interest rates unchanged and the level of bond-buying at $120bn a month.
The dollar slipped in Asian trading, after Fed chair Jerome Powell suggested that policy tightening was “some way away”.
I’d say we have some ground to cover on the labor market side.
I think we’re some way away from having had substantial further progress toward the maximum employment goal.
Michael Hewson, chief economist at CMC Markets UK, has looked at this.
The Fed did acknowledge that the economy had progress towards the goals need to look at tapering but there was still some way to go. The decision was unanimous. On the question of what signified “substantial further progress” Powell was typically reticent declining to offer much more than various banalities on the topic.
On the economic calendar, the highlight of the day is the first estimate for US GDP growth in the second quarter. The economy is forecast to have expanded by 8.6%, up from 6.4% in the first three months of the year.
The trading platform Robinhood gets set for its first day of trading as a public company, when the US markets open later this afternoon, in what is expected to be one of the biggest IPOs this year, after Coinbase’s listing.
Robinhood, which is used by amateur stock investors to play the market, has sold shares at $38 apiece, the low end of its $38 to $42 range, raising close to $2bn and valuing the company at about $32bn.
It’s a particularly challenging time for IPOs with sentiment as it is now and given how, after a lot of hype, Coinbase is now trading below its $250 indicative price after a big surge on day one.
- 8am BST: Spain unemployment rate for Q2 (forecast: 15.1%)
- 8.55am BST: Germany unemployment for July (forecast rate: 5.8%)
- 9am BST: UK SMMT Car production for June
- 9.30am BST: UK Mortgage approvals and consumer credit for June
- 10am BST: Eurozone consumer confidence final for July (forecast: -4.4)
- 11.30am BST: Spain business confidence for July
- 1pm BST: Germany inflation for July (forecast: 3.3%)
- 1.30pm BST: US GDP growth for Q2 (forecast: 8.6%)
- 1.30pm BST: US Jobless claims for week of 17 July
- 3pm BST: US Home sales for June