Market snapshot: big focus on US data and results season

Ahead of an avalanche of US company results due in July, investors have a number of big data points to watch this week.

Markets remain finely balanced but generally positive ahead of a further raft of factors which are set to dictate the nearer-term direction.

Volatility has dampened, with the approach to both the quarter and half-year end lessening the motivation to take on new positions, and rather to lock in any gains made so far.

Even so, the news of President Biden's intended $1.2 trillion infrastructure deal has whetted the appetite of investors, while in the background the consumer confidence reading later today will give further indications as to the state of mind of an element which is a driving and is dominant force within the US economy.

The non-farm payrolls release on Friday will then bring the inflation and interest rate debate back to the table, depending on the numbers, with the current consensus of around 690,000 jobs being added in June comparing to a figure of 559,000 for May. A particularly strong reading would raise new questions of the Federal Reserve’s current strategy, with the possibility of tapering gaining extra focus.

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Over the next few weeks, the half-year company earnings season will also get into full swing, and expectations are high for a robust showing given the improving economic backdrop. Among the favoured sectors will be big tech, where stocks have had a choppy few months, largely due to various rotations into value stocks and ongoing concerns around regulation.

Even with the large number of moving parts making forecasts difficult, both the S&P500 and Nasdaq edged marginally ahead, and to new record closing highs, having added 14.2% and 12.5% respectively in the year to date. The Dow Jones dipped slightly, but is up by 12% so far this year.

Despite there being a number of positive factors contributing to a decent recovery in the UK, the travel and airline sectors have come under renewed pressure. The Delta variant remains a concern generally, and the UK government’s reticence to open up the travelling floodgates has been mirrored by a reluctance from some countries to welcome UK visitors. As such, and with the Longest Day heralding the onset of summer, it is increasingly difficult to foresee anything like the increase in holiday makers which the industry had been pining for over the season.

There are, however, other places to discover from an investment perspective, especially those sectors benefiting from the reopening trade domestically, as well as cyclical stocks spending some time in the sun in a generally recovering economy. The more domestically focused FTSE250 index is currently carrying the fight, ahead by 10% in the year to date, with the flagship FTSE100 not far behind and up by 9.5%.