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Thursday almost encapsulated all of the topics that the capital markets focus on, condensed into one day. Thursday was one of the busiest days of the half-year in Europe for company’s reporting earnings. Greece made headlines again as the IMF declared it could not be part of a third Greek bailout. US interest rate expectations remain reassuring vague post the latest interest rate announcement, and finally more mixed signals from the latest macro economic data.


Companies in Europe generally reported earnings that overall, at worst met expectations, and in a few examples exceeded. The expectations may well have been managed in advance, but even those companies exposed to global commodity prices reported no worse than had been expected.


The IMF is wary of a financial contribution to a third Greek bailout, according to an FT report on Thursday. High debt levels and poor record of implementing reforms disqualify Greece from a third bailout. German officials, again according to the FT, have said it would be impossible to win Bundestag approval without the IMF involvement. This move is likely to be a considered tactic to continue to pressure the Greek government to ensure they apply the agreed cuts. Greece remains unlikely to stay far away from front page news. 


On Wednesday night the Federal Reserve announced they were keeping interest rates unchanged for another month. Every month the accompanying statement remains reassuringly vague as to the timing of the first US rate rise. Economists pencil in a date the Federal Reserve is working towards only for the date to be pushed out as it approaches. This time feels like no exception as the closer we get to September the less likely it feels like we will get a move from the Fed.


The macro data came in the form of the latest World Trade Monitor showed the volume of world trade falling in May by 1.2%. It has slid in four of the past five months in 2015 and risen just 1.5% in the past twelve months. This compares to a long-term average of about 7%. Reports like these continue to support the view interest rate expectations are to remain muted


As we come to the end of another month, after a difficult June equity markets have stabilised in the month of July. With the holiday season in full flow now it would not be surprising to see more volatility in equity prices. This mid year pause for breath may not be a bad thing for equity prices into the year-end


Posted on July 31, 2015 .